Sunday, 23 October 2011


Readers will know I only grudgingly report good news on the Greek deficit, but facts are sacred - as the Guardian says when it's not busy ignoring them. So here's a bucketload of pre-Halloween treats from Jabba the Hutt Deputy Prime Minister and Finance Minister of Greece (for that is how he styles himself these days), Prof. Evangelos Venizelos.

As you can see, Jabba has pulled off a good month. In fact, in terms of year-on-year gains this is the best month ever, with the government managing a small primary surplus.

In the meantime, last year's spending figures are now revised up by EUR350m, so an extra EUR10m of mystery spending was added to the September 2010 figures (more here) which no one feels an urgent need to account for. In fairness, what is EUR10m these days? Our Government figures are now taken straight from that Austin Powers gag.

So what, dear readers, accounted for the improved figures? Bear in mind that the success story is that year on year the primary deficit is now 'only' up by EUR132m. Well, year on year, revenue grew by about EUR1bn, half of which came from the public investment budget (you know, the one the Government keeps cutting and the one defaultniks would happily cut to zero). On the other hand, primary spending fell by EUR855m. All of this, and another EUR1.04bn came from cutting public investment. Yippee!!! Naturally, we can't do this every year. Cutting EUR1.9bn from the investment budget in a year may sound clever but in fact there's only EUR3.5bn left in that budget to cut. What happens when we run out of projects to cut? So enjoy this graph while it lasts:

That's the bad news. The good news is that something did appear to be moving on the revenues front. Apparently income tax receipts were up by 4.5% after accounting for rebates. Or -wait- is that really the good news?

According to this report, EUR650m was paid in September in extraordinary levies originally announced in June, which ranged from 1% to 4% of taxable income depending on one's income bracket (anyone earning less than EUR12K did not have to pay), a fixed EUR300 levy on businesses and the self-employed and a tax on luxury durables, such as boats or large cars (discussed here). There's still a bit of money yet to trickle in but this is the bulk of the revenue from that measure. And the key reason why this money was paid all at once was that Jabba gave taxpayers a 5% discount for paying early. Now I don't know about you but this to me sounds a lot like tapping the taxpayer for financing needs - kind of like the time when Samsung sold me a laptop with a 10% cashback offer. Expect to see more of this.

But let's not forget, this is not regular income. These are one-offs that can only be repeated by further undermining consumer and business confidence. Put it this way. If the extraordinary and artificially front loaded EUR650m from levies had not showed up, the primary deficit for September would have cancelled out every surplus month since January 2011. M'kay.

This tax situation needs sorting. People point to the way the Irish economy is recovering despite austerity, but they forget one thing: the Irish negotiated hard for certainty in their tax regime. They announced their tax policies four years in advance and signalled that their ultra-low corporate tax rate was to be maintained. People in Ireland have - to the extent possible - known all along what to expect, tax-wise. In Greece my folks switch on the news every night wondering whether there's going to be another tweak to the patchwork of incompetence that is Greek tax policy.

Medium-term tax certainty is good for tax revenues, and it's free. Jabba needs to be told this because he's a legal man - the priesthood he belongs to loves churn because it makes them important. Well, nobody else does.


  1. Some points to remember:

    1) Cutting public investment means simply less (or none) new hospitals, roads, transports and generally infrastructure that boosts the economy and keeps people from getting sick dying etc..
    2) People who think Irish economy is recovering, I guess live in a parallel universe. Growth is not at all representative of the state this country is in (unemployment, more people going abroad) and the "support mechanisms" say they still won't make it to return to the "markets" soon. And this country was supposed to be an example of success, go figure..


  2. Manos finally a banker supported by your beloved countries/ banks/ institutions will be running Greece.

    Should I consider your absence a result of you fapping (all day/all night) to that?

  3. I wonder how much is the Primary surplus due to to pushing payment of arrears and delaying payments of legitimate claims.

  4. @gstrbtr I don't normally respond to comments but as yours is so amazingly LOLsome I should point out that I'm all fapped out after watching previews of Meryl Streep playing Margaret Thatcher. Fwoar. Fappers gonna Fap.

  5. Well, don't overdo it, save some energy for the Ronald Reagan film...I sooo hope it will be George Clooney starring. Fwoar !!!!!! material indeed.

    Good that you re still here, I will be waiting for the next post with the adventures of Superneoliberalman (ah zie ztereotypez). Is it a plane? Is it a bird?


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