Sunday, December 02, 2012

Greece Tries Again to Cut Tax Evasion

Click here to read The Wall Street Journal article. Excerpt:
"Customers of all sorts of businesses in Greece will be able to walk away without paying if they don't receive a record of their transaction, under rules set to take effect soon.

Restaurants—seen as among the worst offenders, in part because much of their business is transacted in cash—will be required to add a notification about the right to refuse payment to their menus. But everyone, from doctors and lawyers to plumbers and taxis, also is liable to be stiffed if they don't give receipts.

The new regulations are the latest effort by the cash-strapped Greek government to crack down on endemic tax evasion—adding an extra incentive for businesses to issue receipts. The receipts produce a record of the transactions, and authorities use that record to calculate taxes owed by the business.

"With this measure the consumer is protected and a bold step is taken against tax evasion," said Athanasios Skordas, Greece's deputy development minister.

The "shadow economy" accounts for about 24% of Greek gross domestic product, according to a study by Margarita Tsoutsoura of the University of Chicago Booth School of Business. Tax dodging costs Greece about €28 billion ($36 billion) a year, an amount equivalent to roughly 15% of annual economic output, the study says."
Here is a related story. Greece takes bottom EU spot in global corruption index. What would Plato or Socrates say?


Anonymous said...

This is proof that selfish tax cheats harm economies by not paying their fair share. I wonder what Adam Smith would think about this in accordance with the invisible hand theory.

Cyril Morong said...

I don't think I can be sure what Smith would say. He might say that the gov't should prosecute cheaters. But he might also favor low taxes and sometimes it is high taxes that cause people to cheat.