The Big Fat Greek Swindle

Abstract

One of the most shocking and amazing aspects surrounding the infamous bailout programs that Greece has been immersed in since 2010 surely must be the fact that throughout that period the country has experienced a lackluster and fast declining tax collection rate. That is, even as Greece kept receiving larger and larger amounts of loan disbursements from the Eurozone and the IMF, the government was less and less efficient (or willing) when it came to collecting taxes. To many non-Greeks, this would add insult to the injury of having provided an otherwise bankrupt nation with vast sums of money under incredibly increasingly generous terms only to have regularly faced the opprobrium and invective of those receiving the funds. About €95 billion had accumulated in unpaid taxes by end-2015, an increase of about €60 billion since 2010. Had the Greek government been more efficient or eager to actually gather tax revenue from its residents, the country would have been much more solvent and thusly much less in need of being rescued by official lenders. Many billions of non-Greek taxpayers money (which may never be repaid) would not have been put at risk. If besides the uncollected levies we consider the possibilities for state revenue generation through privatizations and asset sales, it becomes quite obvious that Greece could have stood on its own feet. Just as the bailout loans were about to be disbursed, the Greek government had assets estimated as between €400-500 billion. Added to the neglected tax revenue, clearly more than enough resources for Greece to have met on its own all the key payments (debt redemptions, local banks nationalization, liability management exercises) that have been eventually met with bailout money. And such self-reliance would have brought an added benefit: deprived of the chance to blame the Eurozone-IMF programs for imposing allegedly insufferable “austerity” on the populace, radical anti-system political movements would most likely not have grown influential and captured power. This would have facilitated Greece’s return to capital markets as well as improved economic performance, leading to yet more internally-generated funds (with which to finance enhanced fiscal largesse, say). The inescapable conclusion seems to be that bailout aid was not needed and should not have happened. Euro and global taxpayers would have been swindled by a country that does not want to pay its own way even though it can.