• Σχόλιο του χρήστη 'Π.ΠΑΠΑΔΟΠΟΥΛΟΣ' | 14 Ιανουαρίου 2010, 18:34

    English Version The problems confronting the economics ministry seem to me to be the following: 1. Immediate measures to attain a smaller deficit by the end of 2011 2. Taxes, Social Justice and ”Green” taxes. 3. Long term reform of the social security system 4. Guaranteed minimum household income scheme. 1. The primary object now is to reduce the budget deficit by the end of 2011. The government has taken the wrong approach. i.e. via tax increases which have a high risk of failure. In terms of revenue. The tax measures should be a part of long term necessary well-considered reforms not imposed by emergency pressures. The results of new tax measures will be disappointing. Citizens already pay a high VAT of 19% on most goods and services as well as on ΔΕΗ bills that include municipal and EPT taxes (In effect a tax on taxes). An indefensible 9% tax is imposed on basic foods and milk. All but the richest households will react to tax measures by reducing consumption and house investment. The European commission has mandated a deficit reduction in terms of the value of GNP. This is a mistake. The target should be in an exact euro billions amount. If ,as a result of spending cuts, ever more tax rises and the implied increase in bureaucracy GNP shrinks, which is quite likely. the deficit in relation to GNP will be even harder to attain, Instead, the focus should be on a very severe reduction in government spending. This is necessary because Greece has been living beyond its means for the past three decades. Therefore public wages, salaries and other benefits should be reduced at all levels with the largest cuts at the higher levels pending a full financial recovery. Government spending on other goods and services should be frozen during the adjustment, without exceptions. 2. Tax reforms and social justice are longer term issue which entail a better distribution of the tax burden along the lines already proposed but to the extent that that “the geese that produce the golden eggs” are not killed. The widespread problem of tax evasion is correct. A penal VAT rate of 19% invites tax evasion, while low income, mainly older persons, flock to the popular street markets to buy what they can on a few hundred euro per month without the 9% extra burden. Indeed, if incomes are to be suppressed during the period of adjustment then prices of basic goods and service should be frozen. 3. Longer term tax reforms merit much more careful consideration than demonstrated by the government so far. The mess and unintentional social injustices, for example of the way of applying road taxes are inexcusable. In the range of proposed tax changes I project nothing but increased bureaucracy that is already stifling economic growth. Accumulation of property wealth is not solely by the rich and the opportunistic. Many Greeks have worked hard abroad for most of their lives and use their thrifty savings through self-denial to buy “high value” homes in Greece. Outside of communist countries it is not the function of the State to destroy private wealth. “Green “ taxes are only valid in concept if the proceeds go directly to ecological projects such as reforestation , cleaner air subsidies, solar equipment etc. If used simply as a device to raise general revenues then the State is deceiving people. The same thing applies to taxes on tobacco and alcoholic products. If such taxes are used as a part of social engineering in “the land of fantasies” to promote a healthier lifestyle then the proceeds should be used to support hospitals and clinics. A cynic will say that such taxes are imposed as a reliable source of revenue because bad habits die hard, The social security cash banks should be consolidated into one fund whose funds should be used only for safe modest yielding investments to provide for the future (in the longer term given acceptance of a universal guaranteed household income plan replacing the numerous costly individual subsidies State pensions may gradually become unnecessary and private pension schemes encouraged). As a priority the government should destroy the many cartels in Greece whether of coastal shipping, milk producers, distributors and import sole agencies etc. Greeks pay much too high for many manufactured goods than other West Europeans. The Greek ministers should persuade their counterparts in the European Union that the monopolies, cartels and impaired competition are unacceptable. 4. Looking much further ahead it would might be a good idea to radically rebuild the social security system from its foundations. Today , as in many other societies , Greece is saddled with all kinds of costly social commitments education, health, welfare, unemployment benefits and other social subsidies and state pensions. A universal scheme will be necessary to eliminate all such subsidies and provide more effective and less costly social support only for those who need it. What would fit the task , also reducing the size of the low productive public sector bureaucracy , is a national guaranteed household income plan. The Plan would be the one and only form of direct social welfare support. Public sector productive enterprises such as hospitals and schools would be allowed to charge households for use of their services at rates to cover ordinary running costs. The State would still be responsible for raising capital and meeting the capital costs out of general revenues. All households would need to submit annual income declarations. The minimum level of household income deemed necessary to sustain an acceptable, albeit modest, Greek standard of living should be established and revised every six months by a research body according to the size and composition of each household as well as its location and local rates of price inflation. Those households with income at or above the minimum level would receive no State subsidies. Those below would receive the subsidy amounting to the difference between their actual income and the minimum. For example if in a family of four, the adults were unemployed for more than one month the household would receive the full minimum income. For those at or above the minimum level the would be no income tax up to the taxable level , which would be somewhat above the minimum income level. Above the taxable level a progressive tax system would continue to apply but from the substantial savings produced of a more efficient social welfare system a top tax rate of 25% would apply and the lowest rate would be 5% with a probable average of 10-15%. Personal tax reductions would be allowed but all other present deductions eliminated. Crude attempts at social engineering such as allowing large families off of the road tax on one vehicle would no longer apply or nonsense such as free laptop computers for all scholars, etc. At the same time the VAT on basic food and milk would be abolished and the general VAT capped at 9.9%. VAT should not be applied to any bills ,such as those like ΔΕΗ where local taxes or other charges by public enterprises are in the sum and apply. Aside from stiffer penalties on deliberate tax evasion such more reasonable tax rates than those prevailing today would weaken the incentive to cheat.