Wednesday, 24 June 2015

The real reason Greece has a massive tax-evasion problem

UK Business Insider has a great insight that the BBC will never me mention:

'On average, self-employed Greeks spend 82% of their monthly reported income servicing debt. To put this number in perspective, the standard practice in consumer finance (in the United States as well as Greece) is to never lend to borrowers such that loan payments are greater than 30% of monthly income. And that is the upper limit ... A number of banks in southern Europe told us point blank that they have adaptation formulas to adjust clients' reported income to the bank's best estimate of true income, and furthermore, that these adjustments are specific to occupations ... Take the examples of lawyers, doctors, financial services, and accountants. In all of these occupations, the self-employed are paying over 100% of their reported income flows to debt servicing on consumer loans You read that right: More than 100% of the self-reported income of Greece's professional classes is going toward paying off consumer debts. Not, we suspect, because they have massive unbearable repayments to make, but because they're colossally underreporting their income.'

No comments: