Jack Chivo: What the European Union can learn from a retired couple in Venice

A few weeks ago, there was a flurry of reports from the Italian city about a very interesting story. An elderly couple, after devoting themselves for decades to care for their son—now age 41 and with a well-paying job—had to go to court to have the "boy" removed from their home. Rather than taking care of himself as a mature person, the son continued to demand that the parents give him free housing, all the home-cooked meals he could eat, plus wash and iron his clothes. He told them that under no condition was he ready to be on his own.

Home sweet home for him, but not for his sick and stressed-out parents.

Which brings me to another case of forced parenthood elsewhere in Europe, in Greece, where the same feeling of entitlement is not afflicting a selfish and greedy son, but an entire nation, while the rest of Europe is paying the bills.

For months and even years, the country was, and continues to be on the brink of bankruptcy. Everyone in the rest of Europe is forced to help, but not the Greek citizens themselves. Hundred of billions from Germany, France, Austria, and other EU countries have been already poured into this bottomless pit, and nothing has changed. On the contrary, things are already getting worse, with public-service employees and others taking to the streets to oppose any changes to their privileged status. They're going on violent strikes and fighting in the streets, burning cars, and blocking the traffic in Athens and other cities.

What has happened to this wonderful country, to bring it at the edge of a disaster?

Greeks all over the world, but especially in North America, are in the forefront of innovation and entrepreneurship, creating companies ranging from Blackberry to Amazon, to name but a few examples. They are leading scientists, politicians, businessmen, professors and civic leaders. Why have the citizens of Greece been unable or unwilling to bring back any stability in their own country?

There seems to be a simple explanation.

According to a report printed last year in the New York Times—and other findings from a number of different sources, including the local media— almost nobody, from the very rich to the middle class, or lower class, has paid anything, or very little, in taxes for years, while requesting enhanced government services and expecting full pensions and lifetime benefits at age 60. As a matter of fact, the public sector employees, representing over 20 percent of the labour force, are practically guaranteed lifetime employment, no matter if they are needed or performing well, by the existing laws—which prohibit any firings or reduction of present staffing levels.

And this nonchalant attitude and culture of unchecked entitlement permeates every level of the society, especially amongst the wealthiest. In one example quoted in New York Times, in the most exclusive part of Athens, the suburb of Kolonaki—where one can find the priciest boutiques, the finest restaurants, the dealerships for the most expensive automobile brands—a survey of the tax returns filed by local physicians found they declared an average yearly income of $34,000. About one-third included a total income of $13,000, which is the limit for not requiring the payment of any income tax at all.

This probably only covers the cost of a Prada outfit at their local store. Yet mare living in villas with servants, enjoying the luxury of imported cars, each costing over $100,000, and all other fine things in life.

Most local restaurants, repair shops, along with many doctors and dentists, insist on cash payments, which, of course, are not reported as income. The same for taxi drivers, service companies, plumbers, electricians, hairdressers, and others.

Another survey, also reported in the New York Times, shows that thousands of people, with a big house in the city, a cottage outside, a pleasure boat, and at least two imported cars, declare a combined annual family income of $16,000, again the family limit for no taxes. Which, according to a local economist, wouldn't even be enough to pay for the fuel consumed by their automobiles.

A further example could be the laughing matter for a comedy show, if only a joke.

According to local municipalities, as reported by the New York Times, when homeowners in another affluent district of Athens declared the value of their houses for municipal taxes, only 324 admitted having a swimming pool. Afterward, an aerial survey of the same area, with pictures taken from above found a total of 16,974 outside pools, meaning that fewer than two percent of the owners were honest and paid their taxes for the full value of the house. Of course, the very expensive indoor pools could not even be seen by the surveyors.

Everyone, from the tax authorities to the private accountants, along with the politicians and civil servants, closes one eye, or both, waiting for the rest of Europe to foot the bills. Which they did again this year, to the tune of tens of billions, and the Greek politicians still debate what to do, while practically doing nothing.

If one wonders why Canadians should care about the European problems, just take a look at our stock markets. Measure the value of all Canadian companies, and realize that over the past few months their net worth has diminished by about 30 percent, sometimes more.

In other words, it has cost us hundreds of billions of dollars because of the fear that more European countries will soon default, especially for the four with the unpleasant acronym P.I.G.S.: Portugal, Italy, Greece and Spain.

Think for a moment about the hundreds of thousands of retirees, many of whom have invested in mutual funds, who have seen their pensions lately reduced by one third because others thousands of miles away don't pay any taxes and expect the world to keep propping them.

And the sentiment of revolt is growing in the "donor" countries, primarily in Germany, where an irate railway worker bluntly asked Chancellor Angela Merkel a few weeks ago: "Why should I have to accept higher taxes in this country to pay for those who for years have been avoiding to pay their own taxes?"

Perhaps, the European Union leaders should learn something from the elderly couple in Venice, who have had enough after years of being abused and exploited by their selfish and uncaring son. Perhaps they should tell countries like Greece to stand on their own feet, because there will be no more "free lunches, nor free housing, washing and ironing".

Jack Chivo is a retired journalist who lives in West Vancouver

Comments

5 Comments

Greek

Oct 8, 2011 at 1:21pm

To blame all the Greek Citizens is disingenuous...your point of the wealthy not paying their fair share is also true here in Canada.

That includes all race + creeds, even yours, especially those business people I know in West Van.....:).

The Government Policies or lack of are to blame as are the Corporate Welfare Governments in the EU and Canada, continually bailing out Banks etc...

The Capitalist system is supposed to have defaults that's how you clear the old garbage out and get new more efficient companies providing services, not Corporate bailouts by Taxpayers / Governments.

10 8Rating: +2

James G

Oct 8, 2011 at 4:20pm

I certainly applaud any effort to introduce efforts to have the well off pay taxes and hopefully on a progressive scale.
What is missing in this analysis is the other party in the debacle and that is the European (principally German) banks.

It is quite a scheme they have. They lend huge amounts to those countries they know will have difficulty repaying, impose conditions that make it impossible to repay and demand ever more from them. All the while, the people of the more prosperous countries of the Euro zone, including Germany have to fork over ever more presumably to Greece but the actual beneficiaries are their very own banks.

We've never seen an effort like this to drain countries literally dry and we'd better take notice since every country will eventually be some number on the hit list, including our own. PIGS all right ... for the bankers barbeque ... salmon with maple coming soon ...

T Ian McLeod

Oct 9, 2011 at 11:12am

Tax evasion is endemic at all income levels in Canada (as is a sense of entitlement). Wage and salary earners whose incomes are subject to government scrutiny are shouldering an increasing share of the tax burden, and they are increasingly unhappy about it. But while resistance to paying taxes is growing across society is growing, the demand for public services is not desreasing.

One obvious strategy to address all this would be a much more vigorous strategy of tax auditing and enforcement, but for some reason that doesn't seem to be a big political winner.

Jack Chivo

Oct 9, 2011 at 7:55pm

I read the three comments above and I am shacking my head. Everybody is guilty, but not the tax cheats in Greece, from the the rich to the poor.

There, they only seem to be interested in working less, asking for more, and not paying their taxes.

Wait a minute, acording to the folks above, there are some villains, the German bankers and, by extension, the German tax payers!!

Just imagine, going to a bank in Canada and/or elsewhere, and asking for a financial loan.

The people there will ask a few simple questions, like, are you employed, are you paying your taxes or have problems with the CRA, what is the family's total income, and what are your assets and liabilities??

You might get the loan, or NOT, depending on your financial status.

In Greece however, they want the world to cover their unpaid taxes, pay the over bloated civil servants camarilla, without any restructuring, enjoy the good life on the backs of others, all of this, with NO strings attached.

And, once the loans are gone, they will ask for more help.

As for the faulty comparisons with Canada, if we do not pay our bills, and if we do not work, no foreign lenders will offer us free handouts.

Perhaps, the world should tell the P.I.G.S. two of them, Italy and Spain, just downgraded again this week for not being able to keep their house in order, that the joyride is over!!

I do not particularly like the bankers, quite the opposite, but for the above mentioned FOUR, it is time to grow up!!

Or ship out!!

James G

Oct 10, 2011 at 12:34am

Codswallop.
In your view, the concept of caveat emptor does not exist. Never mind that the banks were well aware of the scheme they set in motion, just as Goldman Sachs knew, just as Bernie Madoff knew, just as Enron had ...
It is true that there is guilt on behalf of the other party in the transaction. The country should probably have not been allowed to join the Euro zone.
Your analysis just swallows whole the racist fiction that the peoples of southern Europe are unproductive by nature.

12 8Rating: +4