Worried Greeks Fear Collapse of Middle Class Welfare State

Posted by Kendall Harmon

Sitting in the modest living room of the home she shares with her parents, husband and two teenage children, Stella Firigou fretted about how the family would cope with the uncertainties of an economy crashing all around them. But she was adamant about one thing: she would not pay a new property tax that was the centerpiece of a new austerity package announced this month by the Greek government.

“I’m not going to pay it,” Ms. Firigou, 50, said matter-of-factly, as she lighted a cigarette and checked her ringing cellphone to avoid calls from her bank about late payments on a loan. “I can’t afford to pay it. They can take me to jail.”

While banks and European leaders hold abstract talks in foreign capitals about the impact of a potential Greek default on the euro and the world economy, something frighteningly concrete is under way in Greece: the dismantling of a middle-class welfare state in real time — with nothing to replace it.

Read it all.

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyEuroEuropean Central BankPersonal FinanceTaxesThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

Posted September 25, 2011 at 5:02 pm [Printer Friendly] [Print w/ comments]

1. Pageantmaster ن wrote:

...she was adamant about one thing: she would not pay a new property tax…

Therein lies the problem.  Many Greek Citizens do not feel obligated to pay tax to the government, and the Greek government often cannot be bothered to collect them; but on one thing all Greeks are united: the belief that they should be bailed out from taxes paid by Germans.

The Germans, having woken up to this, are not quite so sure…

Welcome to the mad mad world of Euroland.

September 25, 6:27 pm | [comment link]
2. Terry Tee wrote:

This is a weird article in that it paints ordinary Greeks as the victims.  While this is certainly so there is another perspective.  For example I read a few days ago in the Telegraph that Greek taxpayers owe 40 bn euros in back taxes and that the tax collectors are on strike.  Friends back from holiday told me that they were under pressure everywhere to pay cash and not use the credit card.  Why?  Because the cash income could be hidden from taxation.

September 25, 9:06 pm | [comment link]
3. magnolia wrote:

i’m sorry pageantmaster nowhere did i read anyone saying that they should be bailed out by the germans.

i’m not really sure what’ going on over there but i can surmise logically that if people are unemployed or taking huge cuts in salary many of them are speaking the truth that they cannot pay or will not pay and even more so if the rich are not paying their share.

i’m not sure that default and expulsion would be a bad thing at this point.

September 26, 12:47 pm | [comment link]
4. Pageantmaster ن wrote:

#3 Hi Magnolia
More a comment on how things got to this stage than current suffering - and on past actions that led to things being much worse than they otherwise would be.  Wealthy Greeks can’t be relied on - they are extremely mobile, being often connected with shipping and trade in the area.  Many are already outside Greece, so can’t be relied on for tax revenue.  But really the problem is that tax avoidance and perhaps evasion has become a national pastime.  There has been an assumption that borrowing can continue, and that others will bail Greece out, the Germans in particular.

The problem for the West is that Greece’s economy is based on trade and tourism and both have been hard hit.  Being part of the Euro, the Greek government does not have the option of devaluing its currency to take the pressure off.  Moreover raising taxes where people don’t pay the existing ones is not much of an option either.  Greece is pivotal politically in the area and a stabilising force, as well as a financial center for the neighboring countries, something they know and has in the past led to the rich countries trying to protect Greece’s position militarily and economically.

The richer countries have to decide whether they can afford to let Greece get into further trouble economically with political trouble not far behind and risk destabilising the whole region.

I agree that being part of the Euro is probably unrealistic for Greece to continue but the other European nations including Germany are so wedded to it and European political identity, that they may well pay more, but it is not clear.

As ever the people who suffer the consequences of past actions are not necessarily those who caused them, but Greece has been pulled up to face the consequences of its attitude to tax collection and government spending and its cavalier approach to debt.  Pray for Greece.

September 26, 4:33 pm | [comment link]
5. magnolia wrote:

ok i will put them on my ever growing prayer list; thanks for the explanation pageantmaster.

September 26, 7:38 pm | [comment link]
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