Saturday, 26 May 2012

"Pay your taxes..." Or how to annoy a Greek.


As ever, I start with the caveat that I'm not an expert on Greece's economy or how it might resolve its current problems. But I am pretty sure - no absolutely sure - that the solution to Greece's economic problems does not lie in getting the populace to cough up more taxes. That might make a small dent in that suffering country's problems with government finances but it won't deal with the consequences of the 'big lie' visited on Greece by its politicians - that the Drachma was equal to the Mark.

Yet - in a great campaign slogan for the Greek worshippers of the Mystic Money Tree (usually referred to as Syriza) - this is precisely what Christine Lagarde, boss of the IMF has done:

"As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.

"I think of them equally. And I think they should also help themselves collectively [by] paying their tax"

If anyone out there really believes that getting people to pay more taxes is a route to economic salvation they should be gently removed from any positions of decision-making (and probably kept away from sharp instruments). The resolution is always - absolutely and every time - in the private sector, in economic activity rather than the legerdemain of public financial manipulation, currency fiddling and regulation. These are the things that created the problem and we aren't going to resolve the problem through more self-important central banking.

In the end, the solution lies in the real economy - in the decisions of consumers, in the promotion of economic activity. And the drivers of that economic activity in Greece are the folk who dodged the taxes - take more money off them and, as sure as eggs is eggs, there will be less economic activity. Meaning that next time, there's less money to take off folk in taxes...

As ever, in this matter, government is most of the problem and very little of the solution.


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