What are the Greek Austerity measures?

Thrugelmir

Really2 wrote: »

Another question,

Is greece bad at collecting taxes (EG people avoid collection) or are their general taxation levels lower? (or were)

Looking at some graphs they spend about average compared to their GDP but they collect a hell of a lot less.
So it could be argued they don't overspend if measured against GDP, but then again if you measure it against tax income they do.

So is it low taxation or is it bad collecting, if bad collecting what are the estimates of missed collections.

Interesting facts.

MONDAY, AUGUST 29, 2011

Ten Surprising Facts about the Greek Economy
In writing this blog, I have come across several facts about the Greek economy that surprised me. In some cases, it was the fact itself that was the surprise; in others, it was the magnitude of something I already knew about. Here they are, along with links to the relevant posts.

Fact #1. Greek GDP is at 2004 levels, and it will take about a decade to reach pre-crisis levels. Greece’s GDP has been declining since Q4 2008, and is now just above 2004 levels. What is more, the initial program agreed to with the troika forecasted that real GDP would not reach its pre-crisis level until the end of the decade. A greater than anticipated recession means it could take past 2020 for Greece to recover to the income level it had coming into this crisis.

Fact #2. Tourism export revenues have declined 28% since 2000. When analysts discuss how the Greek economy may grow, there is an inevitable emphasis on tourism. But tourism has been in steep decline in the last decade. In 2000, Greece’s tourism revenue was €10 bn (based on customs data). Ten years later, it had fallen to €9.6 bn, a 4.5% drop. But if we factor in inflation, revenues from tourism have dropped 28% since 2000, reflecting the structural flaws in Greece’s tourism industry, which relate, chiefly, to getting more tourists who spend less money.

Fact #3. Net exports from shipping have declined 27% since 2000. Shipping, Greece’s other major export, has performed better than tourism but only marginally so. In 2000, Greece’s revenues from shipping netted €4.6 billion. By 2010, that number had fallen to €4.5 bn. Adding inflation means that the drop has amounted to 27%, although some years were better than others. The chief problem is that from a trade perspective, shipping affects both sides of the equation due to money spent to buy ships and on shipping related services. When we take out the outflow of money, the net effect for Greece has been declining.

Fact #4. Collecting 40% of tax arrears would eliminate the 2011 budget deficit. Weak tax collection forms a big part of Greece’s fiscal problem. In June 2011, the Ministry of Finance reported that tax arrears amounted to €41 bn. Of that number, 90% came from 6,500 people and from 8,200 corporations that owe over €150,000 each. Collecting those arrears would more than cover the projected 2011 budget deficit of less than €17 bn.

Fact #5. Employees in state-owned enterprises (SOEs) earn twice as much as employees in the private sector. One of the recurring themes in Greece’s political economy is the dichotomy between an insulated and well-paid public sector and a low-paid (at least for employees) private sector. According to data released by the ministry of finance, employees at SOEs earned, on average, €38,287 in 2008 – which is twice as high as the €19,147 earned in the private sector. For some SOEs, the gap was much higher.

Fact #6. Greeks are as likely to pay a bribe as Nigerians and Pakistanis. According to Transparency International, 18% of households in Greece reported paying a bribe in the last twelve months, versus an average 5% in Europe. That number puts Greece on par with Nigeria and Pakistan.

Fact #7. When you add private debt, Greece’s overall indebtedness is low in Europe. Everyone knows that Greece’s problem is debt. But it is, in fact, public debt that is the problem. A graph shown in a presentation by the former minister of finance adds public and private debt – when the two are combined, it is clear that Greece is at the low end of the spectrum. What distinguishes Greece is not high debt overall, but high government debt.

Fact #8. Greece’s debt was mostly accumulated in the 1980s and early 1990s. Greek society has yet to have a serious debate about how it got into this mess. What is amazing is to see just how recent this debt accumulation is: in 1980, Greece’s public debt was merely 22% of GDP; by 1993, it was 98% where it stayed (plus or minus) for over a decade before going higher in this crisis. In other words, Greece’s debt problem was mostly created over a 13-year period and it was perpetuated thereafter.

Fact #9: Greece had a relatively small state in 1980. Analysts with an eye to history will always point out that the Greek state has been omnipresent in Greek life since its inception. Yet that fact, while true, disguises the extent to which statism is a post 1980 phenomenon. In 1980, government spending amounted to 24% of GDP; by 1990, that number had risen to 45%. It kept rising, somewhat more modestly to 51% in 2009. The Greek government aims to bring that number back to 45% by 2015.

Fact #10. Greece’s relative standard of living dropped after 1980. In 1978, as Greece was about to join the European Economic Community, its per capita GDP was just 5% below the European average (on a PPP basis). In 2000, the gap was 30%. In retrospect, Greece’s entry into the EEC has been seen as a political gesture, and in many ways it was; but the gap between Greece and Europe was much narrower at the point of entry than ever since. Greece was close to Europe when it joined the EEC; it was only later that Greek living standards stagnated and fell relative to the rest of Europe. Europe moved on and Greece was left behind.

http://www.greekdefaultwatch.com/2011/08/ten-surprising-facts-about-greek.html

tomterm8

Really2 wrote: »

Another question,

Is greece bad at collecting taxes (EG people avoid collection) or are their general taxation levels lower? (or were)

Don't have the estimates, but I think the answer is "Yes." The old greek military junta stayed in power by giving important elites within the Greek society a "get out of tax free" card. Part of this involved damaging the tax collection bureaucracy, and changing the law to make lots of nice loopholes. On top of that, one of the ways ordinary greeks protested the junta was to find creative ways not to pay tax.

Once democracy happened, the new democratic governments weren't secure enough to close the loopholes, and, the greek people were quite used to creative accountancy.

Every now and again, Greece has a tax amnesty to try to collect back taxes. Greek citizens have got so used to it, it's practically part of tax planning.

Really2

Thrugelmir wrote: »

Even with the austerity measures. Debt is forecast to be 120% of GDP at the end of 2020.

So seems only fair that the Greek people should be allowed to make their own choice on the matter.

Kind of my point, whats the question?

It's all very well say give them a choice, but what of? And to what clarity should the arguments be made.

The indication of the "idea" of a referendum was to except the terms of the bailout.
That was in reality a nonsense as the terms were non negotiable.

So if they have a referendum it should at least be on something with a foot in reality with informed consequences on the choices.

Really2

tomterm8 wrote: »

Don't have the estimates, but I think the answer is "Yes." The old greek military junta stayed in power by giving important elites within the Greek society a "get out of tax free" card. Part of this involved damaging the tax collection bureaucracy, and changing the law to make lots of nice loopholes. On top of that, one of the ways ordinary greeks protested the junta was to find creative ways not to pay tax.

Once democracy happened, the new democratic governments weren't secure enough to close the loopholes, and, the greek people were quite used to creative accountancy.

Every now and again, Greece has a tax amnesty to try to collect back taxes. Greek citizens have got so used to it, it's practically part of tax planning.

So it requires law changes otherwise it will keep happening. Personally I would class that as low tax as avoidence seems to be legal from what you say.
But good to know they have some way of increasing revenues.

Odd they would not look at shoring those up fist in the austerity proposals.

tomterm8

Really2 wrote: »

So it requires law changes otherwise it will keep happening. Personally I would class that as low tax as avoidence seems to be legal from what you say.
But good to know they have some way of increasing revenues.

Nah, I'd say they have next to no chance of changing that. They've been trying for the last twenty years. It isn't going to happen in any time-frame that would make a difference.

Really2

Kennyboy66 wrote: »

Iceland didn't nationalise the banks.

Glitnir went into receivership
Landesbanki went into recievership
Kaupthing went into recievership

Are you sure they did not nationalise them?

Glitnir went into receivership
http://news.bbc.co.uk/1/hi/business/7641753.stm
Iceland nationalises Glitnir bank

Landesbanki went into recievership
http://www.telegraph.co.uk/news/worldnews/europe/iceland/3150766/Icelands-Landsbanki-is-nationalised-as-crisis-deepens.html
Iceland's Landsbanki is nationalised as crisis deepens

Kaupthing went into recievership
http://news.bbc.co.uk/1/hi/business/7660511.stm
Iceland has nationalised its biggest bank, Kaupthing,

Looks like whole lot of government debt was caused by nationalising banks to me.

Really2

tomterm8 wrote: »

Nah, I'd say they have next to no chance of changing that. They've been trying for the last twenty years. It isn't going to happen in any time-frame that would make a difference.

They will have to at one point regardless, they will have to balance the books some how.
So they will have to drag up tax incomes to match to EU averages like their spending, or cut the spending.
Devaluing will not guarantee filling that hole.

Thrugelmir

Really2 wrote: »

The indication of the "idea" of a referendum was to except the terms of the bailout.
That was in reality a nonsense as the terms were non negotiable.

Question is political as much as financial. The goal of France and Germany is fiscal union. A yes vote would be a major step forward towards this.

If Greece were to default and leave the Euro. Then the IMF would step in.

So austerity either option. Retain independence is the choice.

Really2

Thrugelmir wrote: »

So austerity either option. Retain independence is the choice.

I would say that is best done in general election though, it is pointless having a pro europe government in power if the people want out.

So I really see general elections are the way forward for greece, not a referendum. But in the mean time they may have to take what is on offer, it has been left so late.

Kennyboy66

Really2 wrote: »

Are you sure they did not nationalise them?

Glitnir went into receivership
http://news.bbc.co.uk/1/hi/business/7641753.stm
Iceland nationalises Glitnir bank

Landesbanki went into recievership
http://www.telegraph.co.uk/news/worldnews/europe/iceland/3150766/Icelands-Landsbanki-is-nationalised-as-crisis-deepens.html
Iceland's Landsbanki is nationalised as crisis deepens

Kaupthing went into recievership
http://news.bbc.co.uk/1/hi/business/7660511.stm
Iceland has nationalised its biggest bank, Kaupthing,

Looks like whole lot of government debt was caused by nationalising banks to me.

Yep - absolutley sure.

Those announcements were all superceded by recievership on or around 9th October.

Ask yourself this - if the Govt. took over the banks, why did Germany, Isle of Man and UK have to bail out savers and use ant-terrorist legislation!

see Generali's thread about Iceland and the IMF