May 222012
Porsche Cayenne

Porsche Cayenne

The search for a deal to save the euro seems futile. George Papandreou introduced some drama into the staid business of banks and governments lending money to each other by calling for a referendum to approve a bailout plan. This maneuver sent Germany and France back to their tents on the French Riveira to sulk, from where they then summonsed the embattled premier to come and explain himself.  However, there is more bad news ahead if the extent of Greek tax evasion becomes known.

Here’s the startling fact: there are more Porsche Cayennes registered in Greece than taxpayers declaring an income of 50,000 euros ($68,500) or more, according to research by Professor Herakles Polemarchakis, former head of the Greek prime minister’s economic department.

While German car workers may take pride in this evidence of their export success, German taxpayers may be less keen to bail out a nation whose population appears to take such a cavalier approach to paying its fiscal dues. Never mind all that macroeconomic talk about deficit distress, many Greeks are still plainly “livin’ large.”

Something is very wrong when the modest city of Larisa (you have heard of it, it’s the capital of the agricultural region of Thessaly) with 250,000 inhabitants, has more Porsches per head than any other place on earth.

Professor Polemarchakis writes that Larissa “is the talk of the town in Stuttgart, the cradle of the German automobile industry, and, particularly, in the Porsche headquarters there”, since it “tops the list, world-wide, for the per-capita ownership of Porsche Cayennes”.

“The proliferation of Cayennes is a curiosity, given that farming is not a flourishing sector in Greece, where agricultural output generates a mere 3.2% of Gross National Product (GNP) in 2009 – down from 6.65% in 2000 – and transfers and subsidies from the  European Commission provide roughly half of the nation’s agricultural income.

“A couple of years ago, there were more Cayennes circulating in Greece than individuals who declared and paid taxes on an annual income of more than 50,000 euros.”

Never mind all the other Porsche models…

Hard to believe? Don’t take my word for it. The report in Athens News will add to fears, expressed by leading economist George Soros and others, that last week’s deal to save the euro can only buy a little time – not a permanent solution. China may also question why it should support economies that pay their unemployed more than most Chinese workers earn.

Binding such widely differing cultures as Greece and Germany together was always going to be a problem; not least because of diverging attitudes to such financial fundamentals as work and tax. Now, during this week’s G20 Summit in Cannes, someone must be sent to the cradle of culture to explain that deficits will balloon unless all taxpayers pay their fiscal dues.

I nominate John Boehner.

 Posted by at 11:55 am

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