Greece: How to induce yet more capital flight
Update: 2010-02-24. The Wall Street Journal has picked up on this theme. See Wealthy Greeks Send Money Abroad. The point is that the taxation rules are not necessarily going to increase taxes. They will, however, increase capital flight.
This outline of measures that Greek Finance Minister George Papaconstantinou is now taking comes from Reuters:
"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"
"With the new tax scale, there is a shift of the burden from low and middle income to high incomes.
"There’s tax relief for incomes up to 40,000 (euros)"
"Taxable income based on the new scales will include capital gains from the short-term trading of stocks"…
"Every autonomous taxation … for special professions, like engineers, architects, taxis, gas station owners and kiosks is abolished"
Sounds like Argentinean style tax ‘reform.’ The rich in Greece are reputed tax dodgers of the epic variety. But, these measures will only induce more capital flight as such measures in Argentina did when they imposed their own crack down. I understand the capital flight has already begun, actually. If you are looking for ways to induce panic and make things worse, then here you go.