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Saturday, 4 February 2012

Greek and Italian fiscal reform impossible

Culturally embedded "black" economies will require at least a generation to shift into the northern European style tax system demanded for the euro currency's survival.  The problem of shifting collective popular attitudes towards cash economies for the required fiscal reforms, is intractable.  Falsification of Greek national accounts prior to their first bail-out betrays acceptance of entrenched dishonesty to the highest level.

For some of the many anecdotes which describe interesting transactional experiences, and the fabrication of financial records, see "Why Italy is in trouble", by Geoffrey Luck, Quadrant, Jan.-Feb. 2012, Vol. LVI, No. 1-2;  and "So very untaxing to live in Greece", by Jim Bruce, p54 Australian Financial Review, Feb. 4-5, 2012.

A ship's master has related to me that at least one Greek private luxury motor yacht is deemed "ferry" status for Greek government concessions, yet never operates as a ferry.  The owner uses the yacht for his or her own private purposes.

Much of the Greek and at least southern Italian economies (south of the River Po?) have operated outside the tax systems for generations.  The practices are culturally entrenched and inheritably embedded.  Those practices and attitudes can not be changed within a generation, if ever at all, let alone in time for the pan-eurozone fiscal prudence which is required now.  The detection of falsified national accounts didn't fix the problem:  it only revealed that there remains a huge problem to be fixed.

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