To Beat Austerity Measures, Pay Your Taxes

The people in both Spain and Greece have made it known they are fed up with their governments austerity measures, but in part, they are the ones making them necessary. The number of tax dodgers is rising day by day, and that fact alone means governments are not getting the money they need to get the economy back on its feet.

More People Want Cash Transactions

More People Want Cash Transactions

I can talk from personal experience here in Spain, because when someone does something for you here they invariably ask for cash instead of a card payment or bank transfer. Why? Because a cash payment does not go through the bank and is therefore not recorded, hence they do not have to pay tax on it. Even some shops will only take cash now as the economic squeeze bites. Many big businesses are not paying the level of taxation they should, and this too is hurting the economy.

Falling House Prices In Spain

Building Boom Collapse

The government is hemorrhaging money to keep the economy afloat and the ever-increasing number of tax dodgers only makes the situation worse.  Both the Spanish and Greek governments are struggling to pay social security and unemployment benefit to those who need it, and the number of unemployed is rising daily, which only increases the load.

With prices rising, pensions and benefits being cut, people are looking for any way possible to make ends meet and the most obvious is to avoid paying taxes. It is a cycle for destruction of the entire economy and both countries are heading into the abyss.

A Comparison Of Tax Evasion By Country

A Comparison Of Tax Evasion By Country

The Greeks have always avoided paying the proper level of taxes on a massive scale, and that is the main reason for the breakdown of their economy in the first place. Spain is now going down the same road. I do not blame just the people, for the governments of both countries need to get their spending priorities right and make the paying of taxes fair across the whole population.

The Greek Rich Are Moving Their Money Overseas

The Greek Rich Are Moving Their Money Overseas

Many super rich in Greece have not paid taxes for decades because they were bringing investment and money into the country, and the ordinary people had to carry the load, although most of them avoided paying their full share through corrupt tax officials. In the last few years the rich have been moving their capital out of the country to off-shore accounts to avoid heavy tax bills. Many of them have so much money they could probably settle the Greek debt on their own. It’s the old story; if you are rich you can easily move your money around, unlike the man in the street.

Unfinished Apartments Due To The Building Trade Collapse

Unfinished Apartments Due To The Building Trade Collapse

The big problem with Spain, unlike Greece, is that the catalyst for this current debacle was that everyone put ‘all their eggs in one basket’, i.e. the building industry. The collapse of the banks, coupled with the massive fall in property prices and the related stagnation of the building trade put Spain on the road to economic collapse.

Keeping Out The Stench Of Corruption

Keeping Out The Stench Of Corruption

Corruption has also cost the economy dear with just about anyone in a responsible position taking bribes and in some cases, skimming money. The April 7 2006 arrest of practically the entire local council of Marbella on corruption charges is a prime example. Recent allegations of corruption have even been made by the press against the current Spanish Prime Minister, Mariano Rahoy and his Party, although it is not for me to speculate on whether they are true or not. Since that time Rahoy has stated that he will crack down on corrupt practices in both national and local government, but that is hard to do when most people are at it. I wish him luck.

Roy.

2 Responses to “To Beat Austerity Measures, Pay Your Taxes”

  1. Alfie Says:

    Could you share the source of the “shadow economy” graph?

    Like

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