Column : Tax evasion and the crisis in Greece
Economists estimate that Greece loses up to 15 billion euros a year through tax avoidance by individuals and small businesses, with over a quarter of Greek economic activity taking place in an unaccounted ‘shadow economy’. More than half of Greeks declare an incredibly low income of less than 12,000 euros per year on their tax returns and many small businesses don’t use cash registers or issue receipts. The usual way of solving a serious tax dispute in Greece is to apply the ‘rule of thirds’: one-third of the tax bill to the government, one-third in the tax inspector’s pocket and one-third saved by the taxpayer. None of these practices is unknown in India.
Of course, it is not only Greece and India that have problems with tax collection. Between 10-15% of activity in most western European countries takes place in the shadow economy and the UK alone loses up to £4 billion per year in excise tax. Corporate tax evasion is equally widespread.
But the strikingly similar ways that individual Greeks and Indians seek to avoid paying tax on a large scale raises concerns about