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Why Syriza's Pledge To Tax Greece's Rich Could Backfire

In front of the Greek Parliament
In front of the Greek Parliament
Jean-Baptiste Naudet

ATHENS — In her beautiful Athens offices, billionaire Gianna Angelopoulos nurses a large cigar and calls it like she sees it on the promise of the radical-left Syriza party to levy new taxes to avoid the country going bankrup.

"It's gonna take balls," says the 60-year-old.

The wealth of her and husband Theodore is estimated at some 6.5 billion euros ($7.1 billion), placing them among Greece's top three and among Europe's 50 richest families.
And yet, Gianna Angelopoulos doesn't seem to fear the new taxes on the rich that Syriza vowed to impose during its victorious campaign.

Even better, she supports the "vision" of its leader and now Prime Minister Alexis Tsipras, from whom she expects "something concrete."

She was twice elected as a parliament member for the center-right party New Democracy but seems fully invested in the new governing party. "The law must be the same for all and must be respected," she says. "You can't just tax employees. It's not a matter of right, center or left. There are issues, and they must be dealt with. People don't want just words anymore but action. They voted for Syriza to give something new a chance."

The woman who became rich thanks to her steelworks, her oil tankers and her dockyard for luxury yachts goes even further. "Those who used to be in power had been in their seats for so long that they'd forgotten they needed to produce results."

Gianna Angelopoulos, who headed the 2004 Athens Olympics organizing committee, knows a great deal about results. Many had predicted a catastrophic Olympic Games that year, but she made it a success by "making everybody work together."

Does this charming billionaire and Tsipras supporter represent a sign that things are beginning to change in Greece? And that with Syriza's Jan. 25 election, the party will soon be over for the rich and that "they'll pay"?

Greek Finance Minister Yanis Varoufakis has promised to be "ruthless" and hasn't excluded the creation of an "extraordinary tax" on the wealthy to restore a balanced budget. The failure to cancel Greece's colossal debt (320 billion euros, 175% of the country’s GDP) and even of a real debt-restructuring are forcing the government to find money elsewhere if it wants to avoid bankruptcy. Especially if it wants to execute the social program for which it was elected — increasing the minimum wage, pensions, creation of public service jobs. The European Union and International Monetary Fund will agree to lend more money only under strict conditions.

Capital flight

Accused of not contributing enough to the national effort, the very rich and the Orthodox Church, among others, are in the government's crosshairs. Under the constitution, the Greek merchant navy is exempt from taxes on benefits and pays only a small tax per tonnage. The Greek merchant fleet, the largest in the world, accounts for almost 15% of the global shipping market and for 7% of Greece's GDP. As the country's second-biggest industry behind tourism, it employs over 200,000 people.

[rebelmouse-image 27088809 alt="""" original_size="1019x663" expand=1]
A Greek tanker at sea — Photo: fdecomite

Ship owner Nikos Vernicos obviously takes a very dim view of Syriza's fiscal plans. "I would be forced to change nationalities," he explains. "It'd be easier and faster than changing a truck's registration. I can even remain in the EU without paying tax, for example by taking up a Cypriot or Maltese flag. Or even French, from the Kerguelen Islands in the South Indian Ocean."

Vernicos is a patriot, of course. Like the majority of Greeks, he even supports the Syriza government in its power struggle with its foreign creditors. "It's not me! It's my bankers who'll force me to leave Greece," he insists. "They'll tell me, "Mr Vernicos, we can't lend you money for you to give it to the tax office!""

In any case, the ship owner believes that taxing the rich is a bad idea coming from Syriza, "the party where people spend their days discussing whether they're Marxist-Leninists or Leninist-Marxists. The rich," he argues, "are not that many. Even if you tax them a lot, it won't bring in much. And they'll leave."

In a crisis, it's not the poor who suffer, but the rich, he argues. "Take somebody who inherited an estate that used to bring in 50,000 euros a month. With the crisis, such a person saw his revenues drop, and he has to pay tax on top of it. He really suffers. Whereas poor people, whether they eat meat or fish once a week instead of twice a week doesn't make a difference. They're used to being poor!"

Of course, Syriza won't pay much attention to that kind of argument. And yet, it seems it has already yielded to ship owners. In an interview with Charlie Hebdo, showy Greek Finance Minister Yanis Varoufakis said, "They have to pay their fair share," but then he added that "implementing such a taxation is difficult. Ship owners are very mobile, and it's probable their revenues would leave the country if they were going to be taxed."

The threat of the rich fleeing the country is not to be taken lightly. Capital flight has in fact already been happening. "Five years ago, there were 200 billion euros in the banks," says Costas Bakouris, chairman of Transparency International-Greece. "Now there are under 150 billion. The rich have already transferred their money abroad. And if it's declared, then it's legal. It's the free circulation of capital."

Bakouris believes that the biggest share of the country's tax evasion problem happens not among the wealthy but among freelance workers, shopkeepers, farmers and small companies (85% of Greek companies have fewer than 18 employees).

"It's not 50 billion euros that have left Greece since 2010, but 70 or 80 billion, not to mention the 20 or 30 billion since Syriza took power," says the corporate lawyer of a Greek billionaire, who wishes to remain anonymous. "And a witch hunt against the rich won't bring that money back. Besides, in a country under the rule of law, people can contest a decision in court. And over here, to get a definite ruling, you need almost nine years. No, what we need is amnesty."

A global problem

Haris Theoharis welcomes the "new political will" of the Syriza government. It's only natural. In January 2013, under the previous government and with pressure from foreign creditors, he was chief of the tax administration. But he knows better than anybody that collecting taxes in Greece will be a difficult and long-term endeavor. And possibly a dangerous one too.

"For 5,000 euros, I'll break both your legs," he recalls hearing people tell him. When he was in office, Theoharis would receive such threats on a regular basis. "Even though I passed them on to the police, I never really took them seriously. I didn't resign in June 2014 because of those but because of political pressures," he says, explaining that the prime minister's and the then-governing New Democracy party offices were regularly calling him.

"I was told that contributors were first and foremost electors and that I should calm down," he says. "The closer we got to the elections, the more I was pressured, so I left." Theoharis fears that the prime minister's party "totally underestimates the complexity of the task" and, on the contrary, overestimates the money it could bring into the state coffers. "With the tax havens, it's a global problem that the Greek government alone can't solve. And if in Greece we tax the best-performing companies too much, we could kill the goose that lays the golden eggs."

Just what his pessimism underscores is hard to say. Does it mean that in Greece — where a quarter of the national wealth was destroyed in five years, where 25% of the population lost their jobs and 30% found themselves living below the poverty line — the rich will be able to continue to live as if nothing has changed?

With the sunny end of winter, the terraces of the cafes on the Kolonaki Square, in a chic area of Athens, are all full. The places are expensive, the clientele posh and the drinks unaffordable. On the pedestrian streets, there are luxury shops — Vuitton, Cartier, Prada. Some have closed, but others have opened and are doing brisk business.

Crisis? What crisis?

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