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Thursday, March 8, 2018

"The More Tax Evasion, The Higher The Bill For Tax Payers!"

Thomas Wieser's claim to fame is that he headed the Eurogroup Working Group (EWG) from 2011 until January of this year. The EWG ist the staff unit which does the technical work for consideration/discussion in the Eurogroup of Finance Ministers. Neither of the two entities are provided for in EU treaties.

Wieser gave the Ekathimerini an interview which the Ekathimerini titled "Greece should have been granted debt relief in 2010". My guess is that Wieser was not very happy when he saw that title because it refers to only a minute part of the interview and it is taken out of context. Moreover, the interview includes some very powerful messages whose weight is diminished by a misleading title. Messages such as:

"One thing that strikes me is that the more a country and the people, institutions and media in a country ask themselves how did we get into this mess, the more successful they emerge out of the crisis. This for me is the big difference between Greece on the one hand and Ireland, where there has been very intensive analysis and debate on what we the Irish did wrong in order to get into this mess. This has been quite intensive in Spain and not quite so in Portugal, but it is largely missing in Greece" - this is a very diplomatic way of what more straightforward commentators have called the "lack of ownership". In the early years, one hoped that ownership would eventually take roots but that it would take some time. Perhaps, but it certainly has not taken roots so far.

"The more I have dealt with crises in member states, I have come to see that indebtedness is always the result of governance problems and Greece has the most challenges into its internal governance system" - that's a point which I have made ad nauseam in the early years of this blog (my phrase was always: "Debt is the derivative and the underlying is the economy. One cannot fix the underlying by playing around with the derivative."). Debt is ALWAYS a symptom. High debt may be a blessing when the borrower has a track record of making profitable investments. Or, high debt may finance operational deficits in which case it is a symptom of doom. From the beginning of this blog I have argued that debt was not the major issue of Greece. Among others because a sovereign debt problem can be solved by a few dozen people in a conference room who agree amongst themselves. The major issue of Greece was/is the underlying, the economy, and, regrettably, that cannot be solved by a few dozen people in a conference room.

"There was a huge number of inefficiencies from the Greek side but quite a number of inefficiencies from the creditors’ and the institutions’ side as well" - another evidence of Wieser's diplomatic strengths (I once proposed that the "inefficiencies from the creditors' and the institutions' side" would call for "A Nueremberg Trial for EU elites").

"Out of the 19 member states, with Greece, 18 were deeply upset and I would say there were two, maximum three, countries who were like, “let’s have another try, give them one more chance.” But I think virtually all other countries were like, “you cannot go on like this. This is the end.” The Germans had a paper on it, but in different forms and content, and with slightly different terminology I would say that 16-17 member states were joining on this approach. Don’t forget that" - this is a very disappointing revelation because it suggests that 16-17 member states were happy to hide behind Schäuble's determination, i. e. sharing that determination but not having the courage to say so publicly.

"Ηow well a program has functioned is also related to how much a country has engaged in soul-searching and asked itself how it got itself into that mess and not some nasty foreigners. If I may interject, the way the former head of the Greek statistical authority [Andreas Georgiou] has been treated points to a rather complete lack of understanding of what led Greece into the crisis" - no further comment necessary!

"I am not sure that this Greek government, and the next Greek government and the government after, in the next 20 years will be doing the right things. We can only hope for it" - Wieser radiates optimism for Greece here...

"The more tax evasion you have due to clientelist behavior or other reasons, the higher the tax bill is for those who do pay their taxes" - this is really the punchline of the interview! If only Greek politicians would hammer this thought into the minds of their voters!

10 comments:

  1. Emotional Abuse can occur to anybody. It might maybe not appear to be
    it. Nonetheless it hurts just as much as real punishment.

    ReplyDelete
  2. Weiser made a false statement (which was overprinted by Kathimerini) that Greece's damage to its economy during the six months of early 2015 was 200 Billion euro which happens to exceed the entire Greek GDP. So he is clearly a propagandist and a bad one at this.

    Now when a bad propagandist repeats general statements such as "that tax evaders increase the tax burden on others", he actually damages the message because the messenger lacks credibility.

    From the highly advertised Lagarde list, Greece was able to collect 150 Million of extra tax revenue which is peanuts.

    So the tax problem in Greece has two dimensions. On dimension is its efficiency which needs to improve and become more sophisticated. For years Greek merchants refused to accept credit cards and now it seems that credit card use has become more accepted and in fact required. Believe it or not, speaking from personal experience, when I had to pay my ENFIA (real estate) tax from overseas I couldn't go to a government website and use one of my credit cards to do it. I had to send the money to my lawyer (losing tons of value in currency conversions with Greek banks acting as the monopoly looter) and then someone from the law office had to spend valuable man-hours to physically walk the payment through the system. So there is plenty of room for improvement in tax efficiency collection. To have payers practically begging to pay their obligations and a sclerotic system designed to make the experience totally unfriendly is a mark of idiocy for the Greek bureaucracy.

    Now, the other and most important means of increasing tax revenue is by growing the economy which is severely constrained by austerity. So on top of Greek idiocy we now have the European idiocy to deal with of which Weiser is a bit of a slimy representative.

    Bottom line: You picked a good subject Klaus but the very wrong tool to advance your point. Weiser is a representative of what is wrong with Brussels and of course he is now history for the good of Brussels and Greece.

    Dean.

    ReplyDelete
  3. Careful now with all this "powurful" "soul-searching" and "ownership" Mr. Wieser… You don't wanna go off saying anything consequential for a man of your position or anything out of the tune men of your position and from your part of the woods have been comfortably singing all along…

    Lykinos

    ReplyDelete
  4. @ Klaus.
    Not only do Ekathimerini quote Wieser out of context, they also misquote him. When asked what mistakes the institution made, he answered that what Greece wanted (needed) was:
    1. A complete change of economic policies.
    2. Debt relief.
    After that he become wishy washy diplomatic, instead of telling the ungarnished truth that none of the 2 will work alone. He fails to say that Greek governments, then as now, in their words and acts, refuse to change the economic policies. He fails to tell what you have told so many times about the derivative (the debt) of the underlying (the behavior), and in spite of that Greece did get quite some debt relief.
    I don't read him as being optimistic regarding Greece, but rather washing his hands of her. He is saying what so many Europeans are. "We have brought you through the worst of it, as well as you would let us, now it is up to you. If you want to go it alone without the lifeline we have offered you, do so, but don't come back".
    With their headline Ekath stimulate the Greek feeling of being the unjust victim. In a way you do the same with your remarks about EWG and Eurogroup of Finance Ministers. Both were democratic and necessary, if they had not been there Greece would have been out of the EZ and EU by now. Without them, who would have transmitted the economic and political consequences to the 18 parliaments who had to approve them? Greek PM's or FinMin's, "flagrantly flouting the rules", in an 18 ring circus?
    Lennard.

    ReplyDelete
    Replies
    1. On this point you misunderstood me: I, too, thought that the difference between the headline and the interview was enormous, i. e. misleading.

      Perhaps it's the Austrian blood in Wieser that allows him to phrase things is such a way that one can pretty well speculate as to what he means (particularly is one has Austrian blood oneself...) but which, at the same time, will later allow him to argue that he had meant exactly the opposite (Robert Musil: "The man without qualities").

      I, for one, think that Wieser was saying what you say he should have been saying, just in a very Austrian way. Yes, there may be a bit of washing one's hands in innocence.

      But on one point you and I differ totally: I certainly did not think that Wieser is optimistic about Greece's future. In fact, I thought he was suggesting between the lines that "Greece and Greeks will never change".

      Delete
    2. What if Greece found a way out of this mess? (Use your Google translator)

      https://slpress.gr/oikonomia/o-amythitos-thisavros-ton-ellinikon-vithon/

      Delete
    3. We won't. "They will take it" hopefully peacefully.

      Why do you think Turkey is doing what it is doing. For islands?

      V

      Delete
  5. https://twitter.com/pkarkatsoulis/status/972037018241859585

    What he says:

    "55% of Greek government departments have a maximum of 3 employees. And while there is this abundance of officers without officials, the minister of education is increasing his department heads from 232 to 630."

    Horizontal line: % in total departments

    Vertical line: number of employees per department

    Inside graph:

    21% of departments do not have an employee (but they have a chief-head)

    14% of departments = 1 employee
    11% of departments = 2 employees
    9% of departments = 3 employees

    55% of all departments have up to 3 employees.

    ReplyDelete
  6. Don't get me wrong, I have deep respect for Wieser and others, who worked years in a toxic environment to reach a constructive solution. While hesitant to interpret Wieser's message, I hope it was the same as the one so well formulated by the Dutch ambassador recently.
    Lennard.

    ReplyDelete
  7. Maybe Syriza will make Wieser and other Europeans happy. According to a senior government official , there is now a date on the Growth and Development plan, it will be presented April 27. It will have Greek ownership (a Gmbh?) and 3 recipients, the creditors, the markets and the Greek public. It will have all the characteristics of a plan, purpose, scope of work, master schedule and budget.
    It will be interesting to see how they will solve the trilemma of the 3 recipients.
    PS. Alas, as all Greek media reports, the drawing up of the plan was forced upon Greece by the Euro group.
    Lennard.

    ReplyDelete