Greek FinMin blames high taxes in country on offshore tax evasion

Monday, 13 November 2017 16:34
UPD:16:35
EPA/DOMENIC AQUILINA

On his part, Tsakalotos justified the cascade of tax hikes and rejected criticism that he “cynically admitted” to the over-taxation of Greece’s middle classes, claiming that the mostly leftist government’s first two years in power aimed to alleviate what he dubbed a “humanitarian crisis” from two consecutive bailout memorandums.

Greek Finance Minister Euclid Tsakalotos promised that this year’s end-of-year “social dividend” will be doled out to some one million beneficiaries in the country, with funding coming from surplus cash generated by exceeding memorandum-mandated fiscal targets.

In statements to a state-run news agency over the weekend, the formerly UK-based economics professor promised to funnel the surplus towards social spending and what the leftist-rightist coalition government considers vulnerable social groups. The latter, according to the minister, include pensioners and the unemployed.

Conversely, the opposition and much of Greece’s business community have criticized the latest “yuletide benefit” as merely the result of a “tax tsunami” unleashed by the Tsipras government last year, with the burden mostly falling on Greece’s squeezed middle class – something also acknowledged Tsakalotos.

On his part, Tsakalotos justified the cascade of tax hikes and rejected criticism that he “cynically admitted” to the over-taxation of Greece’s middle classes, claiming that the mostly leftist government’s first two years in power aimed to alleviate what he dubbed a “humanitarian crisis” from two consecutive bailout memorandums.

At the same time, in a bid to deflect growing discontent over rising direct and indirect taxes, as well as new or increased surcharges on everything from liquor to mobile phone usage to subscriber TV rates, he blamed high taxes on the existence of offshore holdings and corporate vehicles.

The latter reference was not incidental, but directly touches on the released of a huge amount of financial documents on offshore accounts, the so-called “Paradise Papers”, which this month succeeded the previous “Panama Papers” and other similar leaks over the years.

One name that sprung up from the leaked documents, and which was subsequently prominently featured in the local press was that of Mareva Grabowski-Mitsotakis, the spouse of main opposition center-right leader Kyriakos Mitsotakis. Grabowski-Mitsotakis’ career as a financial planner and investor of capital emanating outside of Greece includes half ownership of an offshore firm based in the Cayman Islands, a development that generated increased criticism by the government and pro-government press.

In a putting forth a more class-based critique of the entire offshore phenomenon, which he judged as being accompanied by “illegal acts of tax evasion”, UK academic turned leftist Greek politician said:

“The dominant issue that arises, for me, isn’t just the illegal acts of tax evasion, which are certainly numerous and significant, but the fact that the greater portion of all these billions is found there (offshore havens) legally. Therefore, the cynicism of the ruling classes, and the political parties that support them, is that they’ve built up a system whereby the rich have absolute protection from the institutional framework; they can legally exclude themselves from taxation and operate under different rules from those that apply to others.”

In linking this analysis of the global offshore phenomenon with the “tax raid” imposed by his government, Tsakalotos added: “This is what the (Greek) middle classes must know: that we (Greece) have the highest tax rate, but fewer hospitals and schools as a result of this occurrence.” 

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