Weird Greece Taxation Observations

In a country where many people will beg for a job that pays 600.00 Euros a month – less than 5.50 CDN an hour – Greece sure has some strange ways of trying to make an “economic recovery.”

A few months ago, Kyriakos Mitsotakis’ right wing government was elected on promises that included economic reform that would help the country recover from it’s massive economic depression that has lasted many years. One of the “problems” in Greece is that citizens here are very creative in finding ways to avoid paying taxes. But honestly, it’s no wonder when the taxes here are so high and even pretty complicated, from what I have been told. Admittedly, I really don’t know a whole lot about the Greek economy or its taxation rules, but I know a few things and they are really strange to me and are far from pushing the country to any prosperity.

Keep Your Receipts

How would you like it if you were shopping in Toronto and the shopkeeper literally demanded you take the receipt with you? Of course, for some purchases, you’ll want your receipt in case you need to return an item or get service under warranty. But many of us will buy a pack of smokes or even a bottle of wine at the LCBO and not bother with the receipt. Why? We’ve no plans on returning the item. But not in Greece – while you might want to tell the wine merchant here that you don’t need the receipt, you might be scolded while the shopkeeper insists that you must take the receipt!

At first, I found this really puzzling. Then I found out that in Greece, there are government appointed receipt checkers that will stand outside shops and businesses and demand to see the receipt of any shopper leaving the store. If you don’t show the receipt to these inspectors, the shop could face hefty fines on suspicion of not actually charging you the full price including VAT. Quite a strange system compared to how we do things back in North America!

It’s serious stuff here, to be accused of trying to sell something for cash without charging VAT. A recent report in the Greek press showed just how serious, when a shoe repair shop was fined 250.00 Euros (about $365.00 CDN) after a customer left and had no receipt. The inspectors walked into the shop, and seeing a single 1 Euro coin on the counter beside the cash register, issued the fine for tax evasion.

Eventually, the cobbler was able to argue that he had performed a very small service that he did not want to charge for it and the customer left the 1 Euro as a tip. The tax commission accepted the argument and cancelled the fine (source).

But honestly, this type of action to try to catch tax evaders is like trying to break eggs with a sledgehammer.

Bring Your Credit Cards

If you’re planning on visiting Greece, better bring your credit cards with you if you plan to purchase any item worth 300 Euros or more. Again, a sledgehammer is being used to break eggs in trying to stop tax evasion with a regulation that will lower the limit of a sale where cash may be paid. Anything over 300 Euros will require electronic payment when Prime Minister Mitsotakis’ bill becomes law, probably at the end of November.

Many Greeks who are not trying to avoid taxes simply don’t trust banks and technology and prefer to pay for goods and services in cash. In addition, this regulation (to be fair, Mitsotakis is merely lowering the limit from 500 Euros to 300 – but it was not his regulation in the first place) infringes on rights of property – and the exchange of goods between people. Not only that, it will probably do little to stop those who are intent on avoiding taxes in the first place.

As Jonathan Swift wrote, “Laws are like cobwebs, which may catch small flies, but let wasps and hornets break through.

While I certainly appreciate that Greece needs to find ways to make an economic recovery happen, it should be starting by totally revamping the tax system, while taking a chainsaw first, then a surgical knife to the bureaucracy and silly regulations in place that actually prevent people from trying to start businesses. Presently, Greece is ranked #79th in the world on the World Bank’s rating of ease of doing business – and any economic recovery in the country is going to truly need an enormous effort to bring that number up.

I’d encourage PM Mitsotakis to make it his goal, before he starts bringing in new tax regulations or making existing ones more harsh, to make Greece #1 on the World Bank Ease of Doing business list. Perhaps he won’t quite make it all the way to #1, but the country needs to desperately improve the environment for would-be entrepreneurs in Greece.

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