I’ve just come across an interesting article in the New York Times entitled “Tax Cheats Become Italy’s Public Enemy”.
Much of the article details how the Italian financial police is trying to find tax evaders and the pros and cons of tactics such as using denunciations, targeting drivers of luxury cars and even Facebook initiatives to report businesses that were not issuing receipts.
I think that similar tax raids on yacht marinas were done (and duly shown in the press) last year in Greece, possibly to appease the poorer tax paying masses, but I don’t know if much came out of it.
What I found most interesting though was the attempt to change public perception about tax in Italy:
“..a new, all-out war against tax evaders that Italian officials have opened on several fronts, hoping to close Italy’s $2.5 trillion public debt and revive a frail economy that has been buffeted by the euro crisis.
In addition to banning cash transactions, it has included an ad campaign comparing tax evaders to parasites. ”
And further down in the article
“Since Prime Minister Mario Monti’s three-month-old government has made clamping down on tax evasion a priority, tax officials have taken to the task with gusto, emboldened by the clout of new legislation and the blessing of public opinion. There is a growing sense “that tax evaders are no longer an example to follow but an intolerable burden and a threat to collectivity,”
It looks like things could be changing in Italy.
And is public opinion about taxation changing in Greece?
I think that maybe the need for taxation (and payment of such) is slowly sinking in and that people might slowly stop believing that evading tax is a question of (manly) honour. Maybe one day they will even think that paying tax is one’s duty to society, especially one’s duty to people in your society that are much poorer than you. What I haven’t seen yet is a campaign to promote the idea but I might have missed it as I don’t watch TV so please correct me if I am wrong.
But there is another aspect to not paying tax: Greece has such an unwieldy bureaucracy that it is often not possible to do things the correct way.
Here is an example of someone who shall remain unnamed (but I know him well): as a self-employed person he declared several activities which are mainly in the field of web publishing and advertising and can therefore issue invoices (and get taxed and pay VAT) for these activities. So far so good, everything legit and accounted for.
But when this person who also happens to do a lot of photography for his web publishing activities (it’s no secret, the photography equipment is deducted from taxable income as an expense) tries to issue an invoice (because he wants to be legit, maybe he even wants to pay tax) for the sale of rights to photographs (to be used in books produced by other publications) he is told by his accountant who is interpreting tax law for him that he cannot sell photographs, not even rights to photographs because that makes him a photographer.
“Ha! So what’s the problem?”
“To be a photographer you need to have a shop”
“Why do I need a shop to sell the rights of photos I take in the course of my taking photos for my web publishing activities?”
“Because you cannot sell them unless you are declared as a photographer and to be declared as a photographer you need to have a shop. This is what the tax law states.”
So what happens then? Well, you either don’t ever sell your photos (or the rights to them) to anyone…or you don’t tell that you are. There is no other choice.
Now this could be seen as a special case, the sort of fluke that you find in every legal system but I could list similar examples ad nauseam.
So maybe reforming the Greek tax system needs to include getting rid of an insane amount of bureaucratic interference in everything people are doing or trying to do. Get rid of the hurdles, make it simple for people to be openly and legally enterprising and maybe they will be open and legal about what they are doing.