In an interview with the Guardian last week, International Monetary Fund Managing Director Christine Lagardge scolded Greeks for not paying their taxes, essentially arguing that they deserved the pain that is coming with the austerity package they are being forced to swallow:
Lagarde, predicting that the debt crisis has yet to run its course, adds: “Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.” She says she thinks “equally” about Greeks deprived of public services and Greek citizens not paying their tax.
“I think they should also help themselves collectively.” Asked how, she replies: “By all paying their tax.”
Asked if she is essentially saying to the Greeks and others in Europe that they have had a nice time and it is now payback time, she responds: “That’s right.”
But as it turns out, Lagarde was throwing stones from inside a glass house, since she doesn’t pay any taxes of her own due to working for the IMF, which is part of the United Nations system. Most UN employees pay no taxes on their income.
Of course, when it comes to Greece and revenue, Lagarde did have a bit of a point. Greece’s revenue is on the low end for a European nation, due in part to its large underground economy:
In 2009, Greece collected just 36.9 percent of GDP in total government revenues. That was far below the overall EU total of 43.9 percent. Greece’s anemic tax collections ranked them seventh from the bottom among EU countries…This has been a longstanding problem in Greece. From 2001 to 2007, Greece consistently collected far less in revenue than a typical EU country. […]
The current crisis has cast a light on Greece’s shadow economy and massive illicit financial flows. There are varying estimates of the size and impact of the country’s underground economy. Some suggest that a quarter of Greece’s GDP comes from its underground economy and estimates are that Greece lost an estimated $160 billion in unrecorded transfers through its balance of payments over the last decade ending 2009.
Perhaps next time, though, Lagarde should find a messenger that doesn’t earn a tax-free income that is larger than that made by the President of the United States.