Greek Reform Proposals

Greek Reform Proposals.

The Greek Prime Minister Alexis Tsipras  has released details of the Greek government's proposals to reform its financial policies to enable it to renegotiate terms with creditors as the time approaches (early March) for scheduled loan repayments.

It is thought that the European Union and the Greeks have been negotiating all weekend and the proposals are in very simplistic terms designed to combat tax evasion and general corruption in Greece.

We have for many years suggested that many Latin countries have been lax in collecting revenue, to the point where even if you go on holiday today to a Greek island or the mainland it is plain to see that many bars and restaurant owners think it is a game to have two till's. Even in the holiday business that tax evasion and corruption operate at very basic levels meaning that the Greeks have not collected tax revenue efficiently.

The general proposals are:

• A greater use of technology will be required five firms trading so that their record-keeping for income, expenses, profit and VAT can be more accurately monitored
• Introducing new laws to make tax evasion less attractive by introducing much more significant finds and imprisonment sentences
• The development of an government based' self-assessment tax system' similar to those operated by HM RC in the UK and other tax authorities in Europe so that personal taxation can be monitored more effectively.  This new tax system will be developed with the assistance of European tax authority software specialists
• There are many other measures that the Greeks propose to introduce to combat the black market and smuggling, particularly in connection with alcohol and tobacco, as well as cutting public spending within the Greek civil service by controlling expenditure including more efficient monitoring of benefit claimants who are not entitled to benefits in Greece.

In addition, the Greek government also proposes to offer greater incentives to entrepreneurs to develop a legitimate small business programme as well as committing not to nationalise larger businesses that are struggling and indeed will not roll back any previous privatisations of former government services. This is to develop a real private sector economy that is robust within Europe and the world.

The focus really is about Greece collecting revenue efficiently, cutting back on excessive government spending and making the Greek people less reliant on government and more reliant on their own skills. We wish them well with this huge task and we hope the Eurozone approves the proposals to offer some stability to not just Greece but also markets as a whole throughout Europe and the Western developed nations that have lent Greece so much money.

Comment

This is a mammoth task but we believe the Eurozone is likely to approve these proposals as to refuse them would leave both the euro, the European Union and worldwide stock markets in total disarray.  We expect news later today and if it is positive news we then expect some stability in UK, Europe and North American stock markets for the next few weeks or until US economic and employment figures are published.