Greece: How to induce yet more capital flight
This outline of measures that Greek Finance Minister George Papaconstantinou is now taking comes from Reuters:
TAXATION
"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"
"With the new tax scale, there is a shift of the burden from low and middle income to high incomes.
"There’s tax relief for incomes up to 40,000 (euros)"
"Taxable income based on the new scales will include capital gains from the short-term trading of stocks"…
"Every autonomous taxation … for special professions, like engineers, architects, taxis, gas station owners and kiosks is abolished"
Sounds like Argentinean style tax ‘reform.’ The rich in Greece are reputed tax dodgers of the epic variety. But, these measures will only induce more capital flight as such measures in Argentina did when they imposed their own crack down. I understand the capital flight has already begun, actually. If you are looking for ways to induce panic and make things worse, then here you go.
Source
HIGHLIGHTS-Greek FinMin unveils tax reform, wage policy – Reuters
About Edward Harrison
- HBOS to raise new capital 29 Apr 2008
- GE Capital is a bank, but Genworth will be too 17 Nov 2008
- At least six banks need more capital under stress tests 29 Apr 2009
- Seattle Home Loan Bank short of capital 13 Jan 2009
- Meredith Whitney: Regardless of stress tests, banks will still need more capital 21 Apr 2009
Ed,
So what is a country to do? Just burden the tax payers and let the evaders run free?
What Greece needs to do is have a sound fiscal policy and crack down on
crony capitalism in way that limits the desire to evade taxes in good times
and bad.
Ed this time is off topic, but… hedge funds are attacking EUR, because Greece and other weak EU links, so why would any EU country bailout Greece and S(G)IP (for now)? Euro is weaker, it is beneficiary to EU exporters, and from political point – very opportunistic (blame the Greeks on lower standard of living and Hedge funds).
At one point they will start to defend EURO, and union, but why now, when everything develops just fine. In my country there is an old saying, for one who is to much indebted : ” You are indebted like a Greece”