[Neil Gosling wrote this for us to see what is really going on inside the Greek economy. This is part one of a new International series.]
Greece has been in the news a lot recently, you have probably noticed. The latest round of ‘austerity measures’ to save the country from bankruptcy, the riots and demonstrations in Athens, the failing economy; all big news around the world because of the impact it may all have on the Euro Zone. All worthy of our attention of course, and all slightly worrying for many people. But what is it actually like to be there, on the ground, as it were? What do the recent changes mean for the people who are living and working in the country right now?
Living in Greece as I do I am right here at the heart of it all. Except I am not, as I live on a small island in the Aegean, and I am not in the centre of Athens among the tear gas and protests. But I am involved in a small business and, as such, can see what is happening down here on the ground, first hand. I have been talking to other business owners, in the tourist industry, to find out their views on what they think the latest austerity measures will mean to them.
It’s all about tax, or is it? Everyone knows that around 80% of the Greek economy works (or worked) on the black market, don’t they? I mean, I’ve even heard of people setting up a new business and their accountant telling them how much to ‘put through the till’ and how much not to declare, in order to keep their taxes down. We all know that many Greek people (by which I mean business people operating in Greece, of all nationalities) don’t declare their earnings. If you go to a café, for example, and you get a receipt then you know a tax inspector is close by. It’s as simple as that, and it has always been like that. There is currently a certain amount of outrage; people are affronted that they are actually going to have to pay taxes in the future. You can hear, ‘I’ve never had to pay tax before, why should I start now?’
Ok, so that’s a bit cynical (actually it isn’t, I have heard people saying just that), and many people are upset because had the previous governments run the country properly then we would not have gotten into this state; that’s what the riots are about. That and the fact that people don’t like what the current administration is having to do to pick up the pieces of previous ones. But maybe I digress.
Local businesses are having to tighten belts. At one, Neil Gosling’s Symi Dream photo shop, a small ex-pat business that has been running for six years on Symi (symidream.com), Neil says, ‘you have to re-invent yourself each year to attract more custom from less people. Tourism is down on this island, and there are fewer visitors this year. Those who are here also feel the pinch and there is less money for luxuries.’ (VAT on restaurant food and bars has just gone up to 23%.) So, this year Neil has added photo walks to his services, giving up his only morning off to take punters out on paid walks. He’s added this ‘re-invention’ to the ‘wine nights’ that he invented last year. He provides wine and an art gallery one night a week, people come, have a drink and then the selling starts.
But he has to be careful, as does everyone. To try and ensure that more people pay tax, the threshold for personal income tax has now been lowered. Previously you could earn up to €12,000 before you started paying tax (I seem to remember it was about a quarter of that in the UK!) but now you can only earn €8,000 before the tax man gets his cut.
Which means, what? More people will pay tax or less will be ‘put through the till?’ As Neil said, ‘when I get a tax bill I pay it, but it’s not always easy. And when the time coms that I am asked for more tax than I can afford. Well, that’s when I will have to close.’ Him and how many other small Greek businesses?