What’s happened so far and where do we go from here?
by Andrew Leech (aleech@ath.forthnet.gr)
Yes, it’s September and we are facing a new school year, but today it is a year with a difference. Today, we are facing opening our schools with a great scythe hanging over our heads: the imposition of 23% VAT on our fees. Who will survive, and who will be carried off to the land of closed businesses? Which establishments will have clients who can afford to pay these new inflated fees, despite the schools trying to absorb as much of the tax as possible and cutting back profit margins to dangerously low levels; and which will have clients who, regretfully, are forced to end their children’s foreign language lessons due to inability to pay? This is our dilemma for Academic Year 2015. Like a game of musical chairs, we ask ourselves who will still be playing in 2016!
first published in ELT NEWS - September 2015
To refresh your memories, in the early morning of 23 July, the Greek Government passed a vote to add 23% VAT to the tuition bills of frontistiria and language schools, but initially excluded private schools and peripatetic teachers – thus creating a scenario of unfair competition for the language schools. Then, in early August, Tsipras (who wanted to lower the cost of beef in Greece) traded the proposed raising of the tax on beef from 13% to 23%, against the 0% VAT on ALL private education (frontistiria & private schools). In other words he caused the Greek nation to gain 10% (from 23% down to 13%) on beef, but lose out on 23% VAT on all private education! Now, how many hamburgers can you eat to even that out? I estimate you would need to eat 200 kilos of beef (at €9 per kilo) before you even begin to make any savings on your monthly bills (assuming an average fee of €800 language school fees per year for one child). If you happen to have a second child this changes for the worse, and if you also happen to need frontistiria for school lessons, then you have really lost out. The increase in your bills will be horrific, and your government has truly done you a huge financial disservice. Now it is taxing your mind, your education and your creativity! What a pity Tsipras didn’t have Varoufakis by his side when he did the beef trading. The latter may have his faults, but he’s certainly better at maths than Tsipras!
Those of you who remember your history well, may remember that after the Russian Revolution of 1917, the Bolsheviks started shooting the teachers, philosophers and historians. They didn’t want anyone able to propagate a viewpoint that differed from that provided by the state. You may also further recall that after the 1967 Coup in Greece, the Junta fired all the teachers who disagreed with their viewpoints (incidentally, it was these teachers who set up the first frontistiria, in order to use their talents and make a living wage).
With this huge tax on private education, where are we going to train and teach those highly talented young people we need to combat the problems and improve the lot of today’s Greek citizens? We have been educationally, financially and creatively pushed back into the mists of the ‘dark ages’ we thought were lifting after 1821.
Fortunately, we have some farsighted people in parliament today. As I read in Rough Beast (31 July) 27 Syriza MPs violently protested the 23% increase in education fees, and then in August, both Anna Karamanli and Niki Kerameus, MPs for Nea Dimokratia, gathered a further 18 MPs who supported the abolition of this tax, and wrote accordingly to the government on the matter. We wish these two ladies all the success they can garner, and thank them for championing this educational case that so strongly hammers the poorer members of our society.
However, some information I received on 26 August has been especially helpful to our case. That night, I spent a straight 6 hours trawling the EU sites on taxation, directives and education. First, I found that it was EU policy not to apply VAT of any percentage on education. Then I found that Poland, in 2012, had applied to put VAT on some form of education and that the EU Judiciary, in 2013, refused to allow it. That, like it or not, is EU published policy; and I would like to know why the EU Representatives, in discussion with Tsipras were not aware of it. After all, in fairness, Tsipras is not expected to know all the ins and outs of EU policy, but the others most certainly are!
At this point I would like to digress for a minute and tell you about the difficulty in delivering the letters I wrote to the four EU Representatives in Athens (now renamed from Troika to Quadriga). Initially, I had been informed that they were staying at the Hilton, so I addressed the envelopes there. However, on delivery, I was informed they weren’t residents and the hotel could not accept the mail. I took the matter up to the managerial level, but they were adamant in their decision. Then I went to the EU Commissioner’s office in Vass. Sophias. They advised me not to leave the letters with them as ‘the representative only visits about twice a year’. “But, he’s here now,’ I expostulated. “Nevertheless,” they replied, “he’s already visited and unlikely to see us for another 6 months.” What a shoddily run business, I thought, when the boss only visits twice a year! Sounds like the Greek Public Sector!
So I tramped to the Bank of Greece in Amerikis St, where the IMF Resident has his office, and asked to leave the letters with his secretary. “They are all unsealed,” I pointed out, “so that security can check them.” “And why do you think the IMF Resident is going to read letters not sent from a government organisation, he’s just going to chuck them in the bin,” the rude and beefy information desk clerk said. Cheekily, and most untruthfully, I replied, “he will read them when he sees my name, we know each other quite well.”
“Well, I am not going to allow you to leave them, “ he officiously replied. “We offer IMF hospitality here and we control security and whatever gets delivered to him.” Oh, I replied,” does that mean the postman is not allowed to deliver letters to him, then?”
He said nothing, so I continued. “If I go down to the British Embassy and request they deliver the letter by Embassy courier, are you going to turn him away, too. Somehow, I don’t think the Ambassador is going to like that!”
He seemed to somewhat relent at this and said: “the only way you might manage to get them to him is to get a receipt number (arithmos protokolou) for them first. But you will have to go to another branch of the bank for that.” I thanked him and went to Stadiou where I found the Protokolo Section, staffed by a very pleasant and helpful person who, after I explained what I was trying to do, gave me a large envelope for the 4 letters and a sheet of paper to write a covering letter of explanation to Mr W. McGrew.
“Look,” she said, “I can’t give you a bank receipt for this, as it isn’t bank business, but I can give you a receipt that the bank received it and will pass it to his office.” “That’s fine,” I gratefully replied “and thank you for being so helpful. By the way, do you have any children studying a foreign language? “Yes,” she replied, smiling “a little girl.” How nice it was to have someone help you who understood the importance of what you were doing!
Now the matter lies in the hands of the EU in Brussels, and those Members of Parliament who are farsighted enough to understand the meaning and dangers of this iniquitous 23% tax. Let us hope that others will join them, and be wise enough not to leave their mark on the Greek history books of the future as the politicians who condemned this beautiful country to be ‘taxed into ignorance’; for that is how the future (and their colleagues) will portray them. Have no doubt on that!
Incidentally, the IMF answered my 5 August letter, with a very pleasant and courteous reply. They said my comments would be passed to the 4 departments concerned for evaluation. So let us see.
Before closing I would like to refer to a small matter that has been floating about in the media for years now: that Greeks don’t pay 89.5% of their taxes. Yes, there is a lot of tax dodging by those who can get away with it (as they do in all countries), but this canard was put about by the Washington Post in 2010. Alas, the data they were using was flawed by the way debts were calculated by the Greek government: who listed every unpaid debt since 1860 as currently owed! If you then look at what was actually collected in 2010 it was €70.3bn, which reflects around 34% of GDP which, if you compare it with the European average of 38.5% of GDP (UK 35.5%), is not so bad. If you then look at shadow (or black) economies you will see that Greece is 27% against the European average of 20.2%, but you will also note that Romania and Bulgaria are much lower and Italy is at the same level. So we are black, but not as black as painted!
PS. I was delighted to read in Kathimerini that on Friday, 28 August, the Greek Government had received a reply from Brussels, in answer to complaints made. I quote: ‘The interim government has until Monday to decide on whether to scrap the 23 percent value-added tax on private education, following a letter from the European Commission on Friday warning that the levy introduced earlier this summer clashes with European Union regulations, sources told Kathimerini. According to sources, newly appointed Deputy Finance Minister Tryfon Alexiadis has agreed to lift the tax but is looking at measures to offset the revenue losses.
However, I later heard that the scrapping of VAT is only for two months, until the elections. The next party can do what it wants. This brings to mind the matter of import duty on cars. The EU has said there must be no taxation, but Greece continues to apply it, as it gains more from the taxation than the annual fine it pays. Let us hope they don’t do the same with the Hamburger Tax! Personally, I would not vote for any party that does not clearly state in its manifesto that it is not going to apply VAT on any form of education. And if you vote for a party that states this, and goes back on it later, then start getting very angry and very forceful. It seems to be the only language these people understand!
And since news always comes in bundles of three, you will all, no doubt, have learnt that after mulling over this request for a few days the caretaker government has now ordered us to register and collect VAT from our clients, even though all parties have declared they will overturn it after 20 September. Like being on a see-saw isn’t it? Furthermore, since 1st September, several clients have told me they can’t afford the new fees – even though I discounted them, swallowing 10% and passing on only 13% to the client! Doesn’t look good for Greek Education, does it?
Links to EU documents referred to in article:
(A)
(1)Showing that all EU Educational establishments are exempt from VAT,
http://www.citizensinformation.ie/en/money_and_tax/tax/duties_and_vat/value_added_tax.html
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV:l31057
http://www.revenue.ie/en/tax/vat/leaflets/vat-and-education.html
(2) Showing that VAT on Education is exempt throughout EU
https://en.wikipedia.org/wiki/European_Union_value_added_tax
(3) EU answer to Polish Govt wanting to put VAT on education: basically they refused to allow it on 20 June 2013 (AG Kokott of the ECJ)
http://vatresource.com/en/News/News-Items/Poland---ECJ-decision-on-VAT-exemption-for-educational-services.html
(B) Exemptions from VAT
(C) Falsehood that ‘Greeks don’t pay 89.5% of taxes’
http://www.bbc.com/news/magazine-33479946
