‘Tragic’ is when EU bureaucrats don’t recognize a good idea

11/3/2015

By Francesco Caselli*

Sir, On receiving the Greek proposal to enlist citizens and tourists in their fight against value added tax evasion, eurozone officials “laughed out loud” and described the proposal as “quite hilarious, if it were not so tragic” (“Greece hatches ‘tragic’ plan for tourists to act as tax spies to unlock €7bn bailout”, March 4).

What is really tragic is that Greece is at the mercy of a narrow-minded, unimaginative, and arrogant European bureaucracy ignorant of local culture and history and incapable of recognising truly creative, promising, innovative ideas that might help Greece out of its horrendous predicament.

Combating value added tax evasion is central to any attempt to rebuild the Greek government’s ability to secure revenues commensurate to the needs of an industrialised economy. Anyone with the slightest experience of life in countries where value added tax is routinely flouted (a category that clearly does not include the officials in question) knows that no matter how sternly the government promises fines and punishments for the evaders, nothing will change until the deeply ingrained culture of tacit acquiescence by customers is broken. The Greek government should be commended for coming up with a clever idea to give incentives to customers to turn from passive abetters to whistleblowers for tax officials.

There are precedents for similar ideas elsewhere. In the 1990s Italy fined customers who left a shop without a receipt, and Argentina exchanged receipts for lottery tickets. Both measures yielded large changes in tax receipts and, perhaps more importantly, did much to shatter the culture of passive acquiescence. It is a fair bet that eurozone officials would have laughed out loud if confronted with such ideas. Far better to carry on destroying the economy and living standards with the current litany of cuts in employment, social transfers and social services.


*London School of Economics, UK

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