Greece Doesn’t Like The Tax Man

Living in Greece, I’ve discovered some things that could use improvement. One pet peeve of mine is that businesses rarely accept anything but cash. Why? Is Greece stuck in the stone-age?

The answer is a little bit more complicated.

To make a long story short, Greeks prefer cash to prevent tax authorities from seeing that revenue, effectively lowering their tax bill.

Here’s the long story:

Greece is a country rife with corruption, and tax evasion is a national sport. It’s estimated that between 28 and 35 percent of Greek GDP goes unreported (amounding to 70 billion euros). 25% of Greeks reportedly live on less than 22 euros a day, yet posh cafés are booked full despite selling the most expensive coffee in Europe (espresso shots often sell for 4 euros/$6.20).

Greek income clocks in at 80% of the Euro-zone average, hardly a good showing. But if the underground economy of unreported business was counted, Greek income per-capita would fall ahead of the Euro-zone average.

This pervasive tax evasion gives consumers more spending money, but it really hurts the public coffers. Tax revenues could conceivable double with more accurate reporting, leading to a reduction of public debt, increased spending on education, and more money for research and development.