I have been rather absent from the blog, at least on the topic of Greece since the election. This has been due to desperation. I had argued against voting for Syriza again, fearing that their disastrous 7 months in power would be followed by more where they to be re-elected.
Now, about a month in, we have good evidence that the cluelessness, incompetence and politicking that characterized Tsipra’s first term continues unabated. Let us pick two examples (there are plenty, but anyway), the church-state relationship and VAT increases.
One would expect a government of the ‘left’ headed by (supposedly, and trips to Athos aside) an atheist (Tsipras) to have a healthy attitude towards the church. Syriza had promised to distance the state from the church (in education primarily) and many were hoping that the rich Greek church would be made to participate in the fiscal consolidation taking place, sharing with the rest of the population.
Alas, this was not meant to be. After a very brief argument about making the religion class optional at school, Syriza folded. All remains as is. I am particularly incensed by this as I have been on the receiving end of this ‘education’. My ‘religion’ class at the lyceum (final 3 years of obligatory education, ages 15-18) was taught by a priest. A scrawny little excuse for a man. He explained to us at length -over years- how masturbation leads to eternal damnation, how the Jews are conspiring against Greece, how homosexuality is a crime against God and other such pleasant (yet extremely commonplace) edicts of Orthodoxy. The religion class at the Greek school should not be made optional, it should be eradicated. People that want to send their kids to be indoctrinated into hate propaganda can go to Sunday school.
The proud government of the left rounded its ‘assault’ on the Church today by exempting them from capital controls. Bravo!
Moving on to VAT increases. Mr Tsipras, with the wholehearted help of the Troika, has succeeded in creating (but he negotiated for 17 hours straight!) the worlds stupidest tax system. We know (I can offer the literature if you wish) that in countries with severe tax collection problems, the best strategy is a flat tax rate set at low levels. The rationale behind this is that if you cannot collect taxes anyway, there is no point trying to increase rates. A low level tax, without loopholes and gimmicks, creates a predictable, easy to monitor and implement system. Coupled with strict fines for violations, this can gradually create a culture of compliance. If the burden of compliance is low, and the cost of evasion high, larger numbers of taxpayers actually turn up and pay their taxes. Sounds outlandish? Poland tried it in the 1990s and it worked.
What Greece is doing is the exact opposite. The tax system is an utter mess, with incredible levels of over taxation. As tax evasion is rife and ensures that self-reported incomes are not taxable, the entire burden of taxation falls on assets one cannot hide (ENFIA property tax) and indirect taxation, like VAT. The VAT regime especially is such a mess, the Troika and everyone in the Greek government should have died of shame. Not only are there multiple rates of tax on similar items (pork vs beef sandwiches will be differently taxed, whether hot or cold also differently taxed, whether bought on an Aegean or Ionian island also differently taxed), they are also variably taxed depending on where bought, or where consumption/use is intended to take place. The latter stupidity was enhanced after the cancellation of VAT exemptions for some(!) islands in the Aegean.
This is illogical, impractical, and useless. Amongst all of this, the government is looking for ‘countervailing’ measures to correct some ‘injustices’ of the bailout agreement.
As people said on twitter, those ‘countervailing measures’ of today are the equivalent of the ‘money exists’ pronouncement of Yorgos Papandreou in 2009. Fantasy from a group of incompetents. But worry not, as Michelogiannakis said (Syriza MP), the people should not complain, as they knew what they were voting for.