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A handful of the tax collectors, however, were outraged by the systemic sorruption of their business; it further emerged that two of them were willing to meet with me.
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Tac Collector No. 1: He just took for granted that I knew that the only Greeks who paid their taxes were the ones who could not avoid doing so- the saleried employees of corporations, who had their taxes withheld from their paycheques. The vast economy of self-employed workers- everyone from doctors to guy who ran the kiosks that sold the "International Herald Tribune"- cheated (one big reason why Greece has the highest percentage of self-employed workers of any European country). "It's become a cultural trait," he said. "The Greek people never learned to pay their taxes. And they never did because no one is punished. No one HAS EVER BEEN punished. It's a cavalier offense- like a gentleman not opening a door for a lady".
The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greeks doctors reported incomes below 12,000 euros a year- which meant, because imcomes below that amount wern't taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn't the law- there was a law on the books that made it a jailable offense to cheat the government out of more than 15,000 wuros- but its enforcement. "If the law was enforced", the tax collector said, "every doctor in Greece would be in jail." One reason no one is ever prosecuted- apart from the fact prosecution would be arbitrary, as everyone is doing it- is that the Greek courts take up to fifteen years to resolve tax cases. "The one who does not want to pay, and who gets caught, just goes to court." Somewhere between 30 and 40 percentof the activity in the Greek economy that might be subjected to income tax goes officially unrecorded, he says, compared with an average of about 18 percent in the rest of Europe.
The easiest way to cheat on one's taxes was to insist on being paid in cash, and fail to provide a receipt for services. The easiest way to launder cash was to buy real-estate. Conveniently for the black market- and alone among European countries- Greece has no working land registry. "You have to know where to guy bought the land- the adress- to trace it back to him. And even then its all handwritten and hard to decipher". But, I say, if some plastic surgeon takes a million in cash, buys a plot on a Greek island, and builds himself a villa, there would be other records- say, building permits. "The people who give building permits don't inform the Treasury", he responds. In the apparently not-so-rare cases where the tax cheat gets caught, he can simply bribe the tax collector, "but if you get caught, it can take seven or eight years to get prosecuted. So in practice no one bothers."
The systemic lying about one's income had led the Greek government to rely increasinglyon taxes harder to evade: real estate and sales taxes. Real estate is taxed by formula- to take the tax collectors out of the equation- which generates a so-called objective value for each home. The boom in the Greek economy over the last decade caused the actual prices to which property changed hands to far outstrip the computer-driven appraisals. Given higher actual sales prices, the formula is meant to ratchet upward. The typical Greek citizen responded to the problem by not reporting the price at which the sale took place but instead reporting a phony price- which usually happened to be the same low number at which the dated formula had appraised it. If the buyer took out a loan to buy the house, he took out a loan for the objectivevalue and paid the difference in cash, or with a black-market loan. As a result the "objective values" grotesquely understate the actual land values. Astonishingly, it's widely believed that all three hundred members of the Greek parliment declare the real value of their houses to be the computer-generated objective value. Or, as both the tax collectors and a local real estate agent put it to me, "every single member of the Greek parliment is lying to evade taxes."
On he went, describing a system that was, in its way, a thing of beauty. It mimicked the tax-collecting systems of an advanced economy- and employed a huge number of tax collectors- while it was in fact rigged to enable an entire society to cheat on their taxes. As he rose to leave, he pointed out that the waitress at the swanky tourist hotel failed to provide us with a receipt for our coffees. "There's a reason for that," he said. "Even this hotel doesn't pay the sales tax it owes."
Tax Collector No. 2: He arrived with a binder full of papers, only his was stuffed with real-world examples not of Greek people but Greek companies that had cheated on their taxes. He then started to rattle off examples ("only the ones I personally witnessed"). The first was an Athenian construction company that had built seven giant apartment buildings and sold off nearly a thousdand condos in the heart of the city. Its corporate tax billhonestly computed came to 15 million euros, but the company had paid nothing at all. Zero. To evade taxes it had done several things. First, it never declared itself a corporation; second, it employedone of the dozens of companies that do nothing but create fraudulent receipts for expenses never incurred and then, when the tax collectors stumbled upon the situation, offered him a bribe. The tax collector blew the whistle and referred the case to his bosses- whereupon he found himslef being tailed by a private investigator, and his phones tapped. In the end the case was resolved, with the construction company payiong 2,000 euros. "After that I was taken off all tax investigations," said the tax collector, "because I was good at it."
He returned to his thick binder full of cases. He turned the page. Every page in his binder held a story similar to the one he had just told me, and he intended to tell me all of them. That's when I stopped him. I realized that if I let him go on we'd be there all night. The extent of the cheating- the amount of energy that went into it- was breathtaking. In Athens, I several times had a felling new to me as a journalist: a complete lack of interest in what was obviously shocking material. I'd sit down with someone who knew the inner workings of the Greek government: a big-time banker, a tax collector, a deputy finance minister, a former MP. I'd take out my notepad and start writing down the stories that spilled out of them. Scandal after scandal poured forth. Twenty minutes into it I'd lose interest. There were simply too many: they could fill libraries, never mind a book.
The Greek state was not just corrupt but corruptin. Once you saw how it worked you could understand a phenomenon that otherwise made no sense at all: the difficulty Greek people have saying a kind word about one another. Individual Greeks are delightful: funny, warm, smart, and good company. I left two dozen interviews saying to myself, "What great people!" They do not share the sentiment about one another: the hardest thing to do is to get one Greek to compliment another behind his back. No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating and stealing. Lacking faith in one another, they fall back on themselves and their families.
The structure of the Greek economy is collectivist, but the country, in spirit, is the opposite of a collective. Its real structure is every man for himself. Into this system investors had poured hundreds of billions of dollars. And the credit boom had pushed the country over the edge, into total moral collapse.
