Greece Elected Leftist Government - 63% Wealth Taxation

Pavlos Sakoglou

Pavlos Sakoglou

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Lately, big foreign investors and institutions tried to re-capitalize Greek unused territories by building Metropolitan Parks, Resorts etc. As it is well known, the horrible state of the economy would be slightly revived from all this new investments and the flow of money in local economies.

Yet, as of today, the left party Syriza announced:
  • 63% wealth taxation
  • Untaxed income to 12.000 Euros
  • Rise of the base salary to 751 Euros
  • Plan for 300.000 jobs.
Good news: More people will get jobs and pay less taxes, thus social development (not sure for how long)
Bad news: Decrease of investements in Greece. (Nothing specific is said yet about exiting the EU)

This indicates a slow down of the Greek financial development. Sad thing to say as native Greek, but I wouldn't invest there. The long-term impact on people will show.
 
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careful about those wealth taxes, most of the time there's nothing in there.
it might actually just be an additional bracket added to income taxation scheme.
I think their major problem is that the precedent government didn't have a proper fiscal administration capable of collecting taxes efficiently. so basically it's pointless of increasing taxes that way.
 
TehRaio said:
careful about those wealth taxes, most of the time there's nothing in there.
it might actually just be an additional bracket added to income taxation scheme.
I think their major problem is that the precedent government didn't have a proper fiscal administration capable of collecting taxes efficiently. so basically it's pointless of increasing taxes that way.
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That was exactly what was going on for decades until the IMF came to Greece a few years ago and the government was forced to do check ups to everyone. Even the cats are paying taxes today.
Though, there are plenty of loopholes in the system and wealthy people and business owners with a good accountant will always find a way to escape the heavy taxation. I think the problem lies somewhere else and not strictly in the tax policy - without meaning that 63% is reasonable. It is insanity and anti-motivating in any case.
 
Pavlos Sakoglou said:
That was exactly what was going on for decades until the IMF came to Greece a few years ago and the government was forced to do check ups to everyone. Even the cats are paying taxes today.
Though, there are plenty of loopholes in the system and wealthy people and business owners with a good accountant will always find a way to escape the heavy taxation. I think the problem lies somewhere else and not strictly in the tax policy - without meaning that 63% is reasonable. It is insanity and anti-motivating in any case.
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I guess what they do with tax policy to a large degree is their own business, but how much trouble are they willing to cause on the euro front? When Tsipras starts ranting about "austerity hurting the poor" and the Germans promptly tell him to go to hell, how does he react?
 
I don't know... If Greece is going to pull through this and stay in the euro, the general view seems to be that they'll need to--

1) Stick with the austerity program (no matter how painful it may be) in order to keep the bailout cash flowing
2) Restructure their chronically inefficient economy to attract foreign investment and start turning things around

And I feel like if they were particularly serious about doing either of those things, they wouldn't have just elected a party called the "Coalition of the Radical Left" to run the country...
 
I don't really think that Syriza will do serious changes. Tsipras is all about talking, like everyone else there. Before the elections, he played the "Greek Robin Hood" against the EU and now he is forming a government with Panos Kammenos who used to be in an "enemy" party for over a decade. That's really controversial, and it's not the only thing.

Leftist parties in Greece, as well as Syriza, were against the capital and the EU, claiming that they are going to exit the Eurozone (which would destroy the European monetary balance), eliminate the austerity (also hard thing to do with the EU over our heads), raise the salaries etc.

Sooner or later, and that might be my humble prediction, he will adapt the same policies as the previous governments. New efficient public finance structure? I really don't think so. Tsipras will probably do same old stuff, but with the difference that he might be forced to make some alterations in the interests in order to prevent the sink of investements and to better the tax system, favoring the poor (some alterations here really make sense). UE and Germany will have the final word though.

Nevertheless, it was good for the people who were desperate for such change. At least it will revive somehow the country and the hope for anything better than before (even if it will probably be quite similar). But only a solid development strategy can save Greece now and that strategy is def not austerity.
 
Pavlos Sakoglou said:
I don't really think that Syriza will do serious changes. Tsipras is all about talking, like everyone else there. Before the elections, he played the "Greek Robin Hood" against the EU and now he is forming a government with Panos Kammenos who used to be in an "enemy" party for over a decade. That's really controversial, and it's not the only thing.

Leftist parties in Greece, as well as Syriza, were against the capital and the EU, claiming that they are going to exit the Eurozone (which would destroy the European monetary balance), eliminate the austerity (also hard thing to do with the EU over our heads), raise the salaries etc.

Sooner or later, and that might be my humble prediction, he will adapt the same policies as the previous governments. New efficient public finance structure? I really don't think so. Tsipras will probably do same old stuff, but with the difference that he might be forced to make some alterations in the interests in order to prevent the sink of investments and to better the tax system, favoring the poor (some alterations here really make sense). EU and Germany will have the final word though.

Nevertheless, it was good for the people who were desperate for such change. At least it will revive somehow the country and the hope for anything better than before (even if it will probably be quite similar). But only a solid development strategy can save Greece now and that strategy is def not austerity.
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Mostly I agree. Now the party will gently and gradually let down the people who voted for it. Austerity is no solution -- but I don't see what alternative Syriza is going to suggest. Probably there will be some small concessions from Germany. Syriza will make some attempt to reduce the crookedness that is endemic to Greece. And these measures will not solve the root problems. That would require Grexit.
 
Most Greeks wonder "if not austerity then what?". The debt is over 150 billion euros and an obvious solution would be a sell out of the public organizations and property. Which is something they did (sell out of our biggest harbor, the national electricity company by a big part etc.) in rediculous low prices.

I think what is missing from Greece (except from money :P ), in short, is marketing. With the natural and historic heritage of Greece, a focus an the highlights of this country would def attract more visitors and help the economy to prosper. That's why, as I mentioned earlier, many foreign investors rushed in to get a big piece of land now they can. They are going to fix it, organize this particular heritage, and promote it. If I had the money I would do the same. If this is not the ultimate solution, it will sure help the situation improve dramatically. Let's not forget that the country's main source of income comes from tourism.

All in all, I don't believe you fight poverty with more poverty, and debt with more debt.
 
Greece's corruption is greatly exaggerated. The main problem of Greece, as far as state's tax collections are concerned, is that the one industry where Greek businesses are global powerhouses, shipping, is the most unregulated and tax efficient (or inefficient for the state).

The same exaggeration (or dishonest propaganda) observed in the myth that Greeks do not work.
OECD disagrees; http://stats.oecd.org/index.aspx?DataSetCode=ANHRS

I believe it is quite obvious what the new Greek government should do and what Brussels should do as well. The problem is it has to be done in agreement, concurrently and soon.
 
MBA-Trader said:
The same exaggeration (or dishonest propaganda) observed in the myth that Greeks do not work.
OECD disagrees; http://stats.oecd.org/index.aspx?DataSetCode=ANHRS
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The number of working hours probably is a red herring. The Nordics and Nederland work < 1500 hours per year. In fact, 0.6% of the population work >= 40 hours per week. The Korean work 2100 hours.

IMO Greece is in a very sticky position in the medium term. Tourism is a single point of failure it seems. Some diversification maybe.
 
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Daniel Duffy said:
The number of working hours probably is a red herring. The Nordics and Nederland work < 1500 hours per year. In fact, 0.6% of the population work >= 40 hours per week. The Korean work 2100 hours.

IMO Greece is in a very sticky position in the medium term. Tourism is a single point of failure it seems. Some diversification maybe.
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Do you mean that productivity per hour is more important than total hours worked? Then, by all means, yes.
But then the question is if productivity is more a matter of capital or labor, anyway. Both generally and in the case of Greece. The main reason I mentioned work hours is the stereotype that Greeks do not work, so it is obvious, the story goes, that the economy would suffer. Generally, people are confusing productivity with effort.

Bloomberg came up with an Innovation Index, I looked at it yesterday. Greece is number one in post-secondary education as a percentage of college-age population. I remember reading that Greek is the number one nationality of university professors (teaching abroad), relative to country population. As far as what is the quality of this post-secondary education, as mentioned in this thread, generally Eastern European education is much-much better than what you would think it is. So, it doesn't seem to me that labor is the real problem.
 
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MBA-Trader said:
Do you mean that productivity per hour is more important than total hours worked? Then, by all means, yes.
But then the question is if productivity is more a matter of capital or labor, anyway. Both generally and in the case of Greece. The main reason I mentioned work hours is the stereotype that Greeks do not work, so it is obvious, the story goes, that the economy would suffer. Generally, people are confusing productivity with effort.

Bloomberg came up with an Innovation Index, I looked at it yesterday. Greece is number one in post-secondary education as a percentage of college-age education. I remember reading that Greek is the number one nationality of university professors (teaching abroad), relative to country population. As far as what is the quality of this post-secondary education, as mentioned in this thread, generally Eastern European education is much-much better than what you would think it is. So, it doesn't seem to me that labor is the real problem.
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Agreed that the vast majority of people in Greece after high-school tend to do their bachelors, followed by their masters and God knows what else. My sister for example has 2 master degrees (Europe and US) and so do some of her friends. Yet, none of them would go to Greece to be unpaid or try to "hide" their degrees in order to land a job with low salary (yes, this is happening).

Greece indeed has many smart people and most of them are sitting there useless working in coffee shops and bars. And imagine what would happen if everybody left the country (as I did for example) : an country full of old people and a big wave of immigration of hungry Greeks. We study so much cause we don't have anything better to do. We just try to be as much competitive as we can, considering the education, so to compete a place in a government for a rediculous salary that leads nowhere. Sounds harsh, but it's sort of "educational hunger games" what is going on there. :(
 
MBA-Trader said:
Do you mean that productivity per hour is more important than total hours worked? Then, by all means, yes.
But then the question is if productivity is more a matter of capital or labor, anyway. Both generally and in the case of Greece. The main reason I mentioned work hours is the stereotype that Greeks do not work, so it is obvious, the story goes, that the economy would suffer. Generally, people are confusing productivity with effort.

Bloomberg came up with an Innovation Index, I looked at it yesterday. Greece is number one in post-secondary education as a percentage of college-age population. I remember reading that Greek is the number one nationality of university professors (teaching abroad), relative to country population. As far as what is the quality of this post-secondary education, as mentioned in this thread, generally Eastern European education is much-much better than what you would think it is. So, it doesn't seem to me that labor is the real problem.
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I agree with you. I work with many people from all over the world, so stereotypes do not exist.

I live in the Netherlands which is highly automated and hence people are productive which allows them to work 1450 hours.

Ireland is a good example to look at as well. It is probably the best place for companies to do business in the EU.
 
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