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.

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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7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.

But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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