I am not an economist, a political scientist or a network T.V. commentator. I am the son of a Greek immigrant. As such, I have my own theory as to the root cause of the Greek financial crisis. Or, if it's not the singular "root cause," it's certainly a major factor in its creation.
First, some background: My father came to America in the 1950s and worked hard in the diner business. He started as a dishwasher at his uncle's coffee shop in Manhattan and eventually worked up to owning six diners. Greek was my first language as a child. I've been to Greece many times and have relatives and friends there. In fact, I named my insurance consulting firm after my father's island, Andros, as a reminder that someday I would like to spend summers in retirement in Greece with my wife.
In short, I love Greece.
Now, to my theory: I have read many articles in the past few weeks attributing the Greek financial crisis to a corrupt European banking structure, the unfairness of the International Monetary Fund and European Central Bank, the nefarious motives of Germany's Angela Merkel and myriad other causes, few of which point a finger at anyone in Greece.
What I am about to offer by way of explanation is not nearly as sexy or complex as those other theories. And while I realize my explanation may sound to some as an excoriation of the Greek people or a diatribe against the Greek culture, I can only say that it is not written with any ill will. I simply have a deep desire to see positive change in Greece.
While I love Greece, I don't love the manner in which many (but certainly not all) Greeks have shirked their responsibilities as good citizens by not paying their full share of taxes. Granted, unrealistic and unwise government policies -- such as bloated public payrolls, way-too-early retirement benefits and overregulation -- are certainly major contributors to Greece's money problems. But I believe that a major cause of Greece's financial apocalypse is the Widespread -- with a capital "W" -- manner in which Greeks avoid paying taxes.
It's impossible to run a fiscally sound government when it is funded by only a minor percentage of rightfully owed tax revenues -- no matter how cool and sexy your finance minister is. And I refer vaguely to "only a minor percentage" because there is no way to know with certainty how much tax revenue goes uncollected each year.
I offer here some examples of Greek tax avoidance that I gleaned not from business school textbooks or an economist's white paper, but from real-life experience.
My Aunt Rita was born in Greece but spent the majority of her adult life in America before retiring to her native land. She owns an apartment in Athens that she rents to tenants. Aunt Rita needed some carpentry work done in the apartment about five years ago. A carpenter quoted her somewhere around 800 euros for the work. But when Aunt Rita told him she would need a receipt for business purposes, he increased the price markedly, saying he didn't realize he would have to report the income and pay taxes. In his world, as with many Greeks, the thought of paying taxes did not occur to him in the normal routine of commerce. It would be like putting on a necktie before going for a swim in the Mediterranean.
The Greek government isn't oblivious to this problem. In the 1980s, when I first started visiting Greece, it was common for merchants to give shoppers change without ringing up (and recording) the purchase. So the government passed a law that required consumers to obtain a receipt for all purchases. Government tax agents roam the streets of Greek cities randomly stopping shoppers, demanding to see receipts for their merchandise. This law essentially places the burden on consumers to ensure that sales taxes are collected and recorded properly. That fact alone should tell you quite a bit about the state of tax collection in Greece.
Starting with my first visit to Greece, I had always been awed by the multitude of small chapels all over the country. On every Greek island I have visited, which are mountainous for the most part, I have seen scores of small churches. Some are even built up high on mountainsides in desolate areas with no road access. I used to look around at the churches dotting the landscape and marvel at the devout nature of the Greek people. Then, one day in 2004, while commenting on this piety to my Uncle Leo on his native island of Andros, he slapped me on the shoulder and said, "What, are you an idiot? Everyone puts a church on their property so that they can get a tax break!" What I thought was a sign of deep spiritual devotion was, in fact, just another way to avoid paying taxes.
I published an op-ed piece on the failure of Greeks to pay taxes in 2011. Shortly after, I sent a copy of it to a number of my Greek friends and relatives here in America. One of them sent me a follow-up email to say my timing was coincidental because she had just received an email from an aunt in Greece saying that her son, a 31-year old Greek citizen, had been nabbed by the Greek government for never having paid income tax in his life. His mother was seeking contributions from relatives to help pay the long-overdue tax bill.
The Greek mentality, it seems, is that only suckers pay taxes and shrewd people find a way around them. "Let the other guy shoulder the tax load, but give me a full array of benefits," appears to be the prevailing attitude. I think many Greeks feel that cheating the government is not immoral or illegal; it's simply the normal course of dealing and all right-thinking people try to do it. I believe this attitude has been embedded in the culture for a long time.
Hopefully, Greek citizens will wake up and realize that the country is in a serious predicament and that one of the essential steps in climbing out of the current abyss is the payment by every citizen of their fair share of taxes.
It's a depressing situation, no doubt, and it will require a concerted effort and sacrifice by everyone in Greece to right the ship. I'm doing my small part by visiting Greece in September with my wife and friends to spend our tourist dollars.
I firmly believe that Greece can bounce back to a place of fiscal stability -- and even prosperity. However, a change in the populace's attitude toward the payment of taxes will be necessary. And, yes, I understand that Greeks are overtaxed at the moment, but the government has chronically overspent and continues to do so. Belt tightening is certainly an integral part of the equation as well.
Greeks in the 21st century would be well served to appreciate the wise words of their ancestor Plato, who said: "The greatest wealth is to live content with little." Sadly, that may be Greece's only option for some time to come.