I have just begun reading this memo and it’s some document. My first reaction is it must be humiliating for Greek politicians to have to vote on it. It tells them exactly what steps must be taken and gives dates by which the measures must be implemented.
The measures in relation to tax reform are itemised with implementation dates. There is no doubt that this is necessary because the tax collection system in Greece is inadequate and corrupt. There is a propensity in Greece towards owning your own business and there are thousands of family-type businesses, from shops to peripteros (kiosks) and frontisteria (private schools, mainly foreign language schools). This causes problems in relation to tax collection in that Greece is also a ‘cash oriented’ society, where credit or debit cards are not widely used, limiting the tax authorities’ ability to carry out an audit trail of transactions. Under the last agreement, the tax collection system was to have been reformed but nothing much happened and the terms of the new Memorandum are attempting to address this issue again.
As an aside, it was recently proposed by the government that a solution to address the audit trail problem would be to reduce the 23% vat rate on all goods to 20% for anyone using a debit or credit card. This would have the effect of reducing the price of goods which incur 23% vat for the more wealthy who are more likely to use these cards, while poorer people would have to pay the higher rate. While this might help in assessing taxes for businesses to some degree, one must ask how equitable this is in a country where real poverty on a large scale has become evident in the past two years.
The trade union environment is my main interest in the unfolding scenario in Greece, where I have been working as a teacher in a private language school since I retired in 2006.
One huge problem to be faced by any government here is the opposition to change from trade unions protecting their own self-interests, which is their raison d’etre under normal circumstances. However, these are not normal circumstances and at the moment every interest group in the country is holding up reforms which will affect their members. This is because many trade unions here have sections which are affiliated to the main political parties and are able to exert pressure on these political parties when it comes to protecting their interests. Political parties receive funding, and of course votes, from members in trade unions and consequently are loathe to introduce measures and reforms which impact negatively on the unions. Pay and pension reductions are one thing, in that they affect everyone but when it comes to reforms which affect individual areas of the economy like transport, pharmacies and lawyers that’s a different matter.
One of the key issues will be the reaction of individual trade unions, and the trade union movement generally, to the privatisation programme and reforms, which are once again part of this memorandum.
I will try to monitor the situation and comment on the developments from a neutral perspective.