Alberto Mingardi  

Greece and tax sadist tourism

Income and Irresponsibility... Krugman's dangerous idea (It w...

The arm wrestling over Greece may be more serious than it originally appeared to many. The Greek government has submitted a draft list of reforms to unlock new financial aid. So far, the other European partners appear to be unimpressed (see this excellent piece by Andrew Lilico).

One reform proposal is however worth taking about.

The Greek government apparently announced that it wants to hire part timers as "undercover agents to grab out tax evaders". Tourists, students and housewives could work armed with wireless devices to catch shopkeepers and service providers who do not issue receipts when they sell goods and services.

It is, in its way, a very innovative proposal. The for profit sectors, as well as non profits, have long been using internships, which are a good way to educate and test potential new workers. The Greek government seems to resort to interns, not so much for raising younger and better tax officials, but as it finds the "real" ones rather unreliable. There's a long tradition of outsourcing tax collection, to make it more efficient, lest it falls prey of corrupt public officials. Instead of relying on profit seeking firms, the Syriza government is looking to a sort of new approach to outsourcing, that will call for the collaboration of public spirited individuals.

The application of the concept to tourists potentially opens up a new whole kind of business: sadistic tourism. Syriza regularly portrays Germans as evil people that want to make the poor Greek suffer: why not turning that into a profitable line of activity for the government? Come to Greece. Ouzo, great sea, beautiful landscapes, moussaka, and you'll have the pleasure to force dirty little shopkeepers to pay their dues to the government!

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CATEGORIES: Eurozone crisis

COMMENTS (5 to date)
Hasdrubal writes:

I seem to remember, maybe it was mentioned over on Marginal Revolution, that some areas of China had the same problem of retailers skipping out on taxes by not giving out receipts. So they started a lottery: Each receipt was printed with a code, and every week the government drew several numbers and held a payout. The consumers naturally and aggressively (if I recall correctly) enforced the receipt rules without any further encouragement. Of course, a gray market for receipts also sprouted up. Minor detail, we'll worry about that if it becomes a problem. ;P

I've even seen places in the States, generally mall food courts, with signs posted to the effect that "We give you a receipt or the meal is free." Though I'm not sure if that's more about tax evasion or averting credit card fraud or something similar.

dutchnational writes:

In Italy it is required by law that everyone leaving a shop or restaurant has to have a bill upon him and can be fined if not.

So, the idea is old but might be effective.

A minimumtax for entrepeneurs might be a good idea. Minimum taks fi € 10.000 per entrepeneur with a minimum taks rate of 30% or so. Payable by all and the only exeptions are after an audit.

Furthermore taxes on all item of luxury like cars, houses, bankaccounts

All taxevasion with 200% fines.

And no more taxfree income of € 10.000 per person.

David R. Henderson writes:

I've even seen places in the States, generally mall food courts, with signs posted to the effect that "We give you a receipt or the meal is free." Though I'm not sure if that's more about tax evasion or averting credit card fraud or something similar.
It’s a way of dealing with one of the biggest challengers retailers face: employee theft.

Cate writes:

In Portugal something similar is being done, with each 10€ cumulative consumption being worth 1 cupon and each cupon entering a monthly lottery to win a car. I know I always ask for receipt now!

And - as far as I know - no grey market has emerged. Possibly, because cupons are virtual, and may even be composed of 2 different purchases (say, if I aquired a 4€ meal and the next day a 6€ scarf, this would be one coupon)...

Yaakov writes:

In Israel they tried the lottery in the 80's. At first it was worthless, because people used receipts from vendors who generally regularly paid taxes anyhow. So they changed the program and required receipts from service providers (where the big money was and is in Israel) in order to participate in the lottery. The public lost interest in the lottery and nearly nobody participated, so the lottery was terminated. The reason is that the custom was (I believe it still is) that if you are willing not to receive a receipt you get VAT off, which is over 15% reduction in the price. That is a lot of money and only few people would give it up for a lottery ticket.

Personally, I believe requesting a receipt when you do not need one for your own tax returns is immoral and stupid. Immoral because you are hurting a person's livelihood and stupid because you are causing a rise in prices.

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