How the Greek Shipping Industry Schemed to Win Big in the Debt Crisis (2/2)

James Henry says it will be difficult to help Greece if global tax competition continues to make fair income taxation impossible

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Story Transcript

Part 2

DESVARIEUX: Welcome back to the Real News Network. I’m Jessica Desvarieux in Baltimore. We’re continuing our conversation with James Henry. James Henry now joins us from New York. He is a leading economist, attorney, and investigative journalist who has written extensively about global issues. Thanks for joining us again, James.

HENRY: You’re very welcome.

DESVARIEUX: So James, let’s pick up our conversation where we left it off. We were discussing Swiss banks in relation to the tax dodging, tax havens across the world.

So it sounds like to me this is sort of this endless game of cat and mouse between the elite and the government. What enforcement regulations could be put in place to change the status quo? And let’s take it from the Greek government’s perspective. What could they actually put in place to regulate taxes?

HENRY: I think the situation highlights the fact that it’s very little that Greece can do on its own to tax, to raise taxes on those who are most able to pay the taxes. Because they have the mobility of capital. They can move their registrations to other locations, their corporations offshore. And they’ve already threatened to do that. The latest bailout package that was passed at 4:00 AM Greek time last night was, one of the provisions included there was this increased duty on the tonnage rate, which is apportioned to the size of each ship. And Greek ship owners have all already threatened that they would be relocating their ships elsewhere beyond the reach of the Greek tax increase here.

So in order to be able to levy taxes on the wealthy Greece needs to have the help of the international community. Not only the EU but also entities like Switzerland that have hosted Greek foreign assets for generations. And this highlights the fact that Greece is not able to solve this crisis on its own, despite the fact that the brutilitarian package that it’s now adopted, reform measures, basically requires it to make a lot of changes. And the EU and other countries, you go on with business as usual.

I think this is a case for–I mean, the world shipping industry is a great example of an industry that’s largely off the books. Its owners aren’t paying taxes, the ships are under-regulated. Greece is left to its own devices to try to raise taxes, it’s not going to work.

DESVARIEUX: Would it work better if Greece were to be outside of the eurozone? Or would it still be this same sort of dynamic?

HENRY: I think if Greece were outside of the eurozone that wouldn’t really address this fundamental tax problem. It might make it worse. Being within the eurozone, it should be able to argue for equitable treatment, and one of the equitable benefits, supposedly, of being members of the EU and being a member of the eurozone is to be assisted with tax collection. We’re not talking about raising taxes so much as we are talking about being able to effectively collect taxes.

Most of the attention that the IMF and the ECB and the EU members of the Troika have given is to raising taxes on ordinary Greek citizens. They have increased the VAT tax from 13 percent to 23 percent. This is a virtually unavoidable sales tax. But at the higher levels of [inaud.] they haven’t developed a program for helping Greece collect more taxes, and that’s what we need to do here.

DESVARIEUX: But James, some would argue that essentially this system isn’t created for us to be able to collect taxes on the elite. And if you’re going to depend on the international community, the Troika, they essentially are in the interests of private industry, banks, and they’re not interested in collecting taxes and aren’t going to create those mechanisms. What would you say to that?

HENRY: Well, this is an example of where we’ve had decades of so-called tax competition among all the members of the EU, the United States as well, and Canada. And the world community at large. Corporate tax rates and the increased use of offshore havens has accelerated throughout the last 30-40 years to the point where it’s become very hard to have any kind of fair income taxation.

We’re–this is a fundamental issue. If we’re going to help countries like Greece have a more equitable society, we basically have to clean up the world system as well as Greece. Otherwise we’re going to have the cost of this entire crisis being borne by the middle class and the poor in Greece, and that’s what’s been happening so far.

DESVARIEUX: What about this issue that this is essentially all part of the plan, that these Greek elite families are just sort of waiting for these islands and public assets to eventually be privatized, and be able to profit largely in what some people anticipate as being a fire sale of these assets in the future? What do you make of that argument?

HENRY: The latest bailout calls for 50 billion euros of privatization. About half of that would be state banks, but there are valuable assets like one of the largest ports in the world, is a very valuable state asset that would be on the block.

This is a pattern in other privatizations around the world where we’ve seen the same kind of austerity programs imposed. The elite move their money offshore to secure currencies, and then when the privatization deals happen they were the ones to come in and be able to buy up the assets at fire sale prices. Greek owners are probably salivating at some of the assets that are going to be offered here, but they’re going to have to compete with people like the Chinese.

But it is unseemly, if you know the history of this industry, the Greek shipping industry in particular but also other industries like tourism, pharmaceuticals, a lot of which is parked in offshore havens, or arranges its sales so that the sales are booked in Switzerland in Zug rather than the manufacturing facilities where they’re actually making the products in Greece.

You know that the offshore industry here is basically a big contributor to this kind of financial mess, and it shouldn’t be allowed to escape scot-free, and it shouldn’t be allowed to go now and buy up these privatized state assets at fire sale prices.

DESVARIEUX: All right. James Henry, thank you so much for your commentary.

HENRY: Quite welcome.

DESVARIEUX: And thank you for joining us on the Real News Network.

End

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