tv Real Money With Ali Velshi Al Jazeera May 10, 2015 6:00pm-6:31pm EDT
countdown to a cries says that could have an impact on the global economy in your retirement. greece is this close to running out of cash. i go through to show you first hand how tax cheats could drive it to ruin, and what should be done to get greek offenses out open. i'm ali velshi, and this is "real money".
>> we don't have the mentality to pay taxes. use. >> this is not just now, it is a legacy. from our parents. the clock is ticking on a greek financial drama that has a potential to become a tragedy for greece and the rest of europe. it's a tragedy that could have ugly implications for the global financial system if greece doesn't pay its debts and gets bounced out of the eurozone. what is scary, we don't know how scott and bonds will correct to a gretsec. what we do know is that a bankrupt greece would lead the country's lenders, government workers, contract and pensioners
holding a bag with no money. make no mistake, this greek drama is all about money. the first big number to wrap your head around is $8 billion. that's the size of the time payment to greece from the bailout package that expires at the end of june. creditors are refusing to release that money until greece adopts further reforms, spending cuts and increases, that is why so much is riding on negotiations between the anti-austerity syriza government of prime minister alexis tsipras, and the institutions that leant greece money, greece is scrambling to strike a deal before the european finance minister met in brussels, next tuesday, greece owes the i.m.f. about 850 million. that is nothing compared to the more than $9 billion in repayments that greece owes the i.m.f., european central bank in july and august. like i said, the clock is
ticking. talk of bond payments and defaults can make it easy to forget the pain that the greek people suffered. years after the global financial crisis and greece's financial crisis in 2010, unemployment in greece is 25.7%, the highest in the eurozone. the greek economy shrunk by a quarter since the melt down. it's not hard to understand why many greeks resent that germany and others nist they make further -- insist they make further sacrifices to get the country in order. and greeks themselves played a major roll - i'm talking about tax evague, not paying the -- evasion, not paying the government money it needs to pave roads, pay police et cetera. it's a huge problem whose roots in greece are widespread and run deep.
the ancient greek ruins a magnet for tourists and a bargain. after decades of terribly mismanaged funds corruption scandal and bribery the greek economy itself is a catastrophic ruin. much comes from a longstanding culture of pervasive tax evasion. i spoke to many greeks, some do not want to be identified. >> this is not just now, this is 30 years old. it is a legacy. left from our parents. >> to be honest with you, we don't have the taxes. the most important is if you pay taxes, you expect to have something back. here, what do you take back? >> you pay taxes from health care and wages. yet to get anything done, you have to go to the private system, our taxes are not being
put to good use, basically. >> last year the government announced that greece is owed 76 billion euros, that's about $82 billion. $82 billion in unpaid taxes. but with an economy reeling from the global financial crisis of 2008. greece only expects to collect 10% of what it is owed. while tax evasion occurs across all income levels, it is rampant across middle and lower income greeks. that said, we heard stories about wealthy greeks systematically and illegally taxes. >> greece's new government vowed to crack down on 80,000 rich greek tax evaders to bring in revenue. cyprus named panay gee oatize as
minister of state for combatting corruption, and anticorruption tzar. he hopes to recover 2.5 billion euros of the unpaid taxes in 2012. a few weeks ago he was president of an organization formed to identify greeks who were money laundering through swiss banks. >> i want to state that we know how much money was picked up from greece and transferred to switzerland or other places from 2010 and after. we have all the dates. we have the information. we now how much money was pulled out of greece and went to switzerland. we have to problem taxing it. like elsewhere wealthy greeks have resources to underreport their earnings.
like many, this man who owns a small fitch market blames the crisis on the wealthy. his business lost about 18,000 a year since the crisis began. >> richer people can hide money. and avoid paying taxes. this man is an associate at a law firm. he is unmarried and has no kids, but has a large extended family, and hopes authorities will not bother choosing the small amounts they own. >> that money is enough to pay my rent. the rest of my income comes from friends and family. you do the maths, i don't have enough to pay taxes. >> greeks acknowledge that to dig themselves out of ruin, the
culture of tax evasion must end. for everyone. at every income level. this athennian has been a shop owner for 27 years, and is married and has a 5-year-old child. he owes more than $9,000 in personal taxes, and another $5,500 in social security taxes. he hopes the new government follows through on a promise to forgives much as half of what an individual owes in unpaid taxes. it's an amnesty that requires admitting how much you owe. that is something many are loathe to do. >> i was not approached by the tax office, i took advantage of a law that passed in parliament. the one about payment. i took advantage of that. i'm trying to pay back taxes little by little clamping down on tax evasion is not easy. targetting the rich is not much to solve the problem. when we come back, i'll
introduce to you a school teacher who says working off the survive. >> for the past 30 years our government has been taking money only from the middle class. it's the only class properly taxed in greece. >> next. >> my idea of a fun night out? a bit of anarchy! >> punk legend, john lydon. >> my weapons are words, not bullets and bombs. >> turning childhood anger... >> i was left-handed and the nuns seen that as a sign of the devil. >> into hit music. >> it's a perfect introduction into becoming a sex pistol. >> every sunday night. >> i lived that character. >> go one on one with america's movers and shakers. >> we will be able to see change. >> gripping... inspiring... entertaining. "talk to al jazeera". coming up next. only on al jazeera america.
>> there is real disunity in the security council. >> about issues that impact your world. >> infectious diseases are a major threat to health. >> "the week ahead". sunday 8:30 eastern. only on al jazeera america. >> we don't have the mentality to pay taxes. >> our taxes are not being put to good use. >> this is not just now, it is a legacy. left from our parents. in greece's current mess a lot has been made of the tax evasion, the government is so desperate for cash, it's cracking down on lower income professionals. most greek teachers give private tutoring lessons to supplement their salary. i met a science teacher, with 30 years teaching. he said teachers are paid such
low ages they can't pay taxes and support families on the salaries they earn. explain to me how it works in teaching. when you teach in the school, your salary is recorded and you must pay tax on that. when you tute or outside of school, how does that work. >> translation: in most houses we get 10 euro for kid per hour per lesson. if you declare it, and are taxed 30%, nothing is left. >> most of the work done off the books doesn't get declared. >> all of it is under the table, as we say, and is a necessity. >> what can the government do if it's trying to get everybody to declare everything that they earn, trying to take the economy out of the shadows and into the main stream. do they have to reduce the amount of tax that they charm for people that books? >> i do believe the government
needs to lower taxes and give us incentives in order to get out of this undocumented economy and into the mainstream. for the past 30 years our government has been taking money only from the middle class. >> it's the only class that's been properly taxed in greece. if you don't start taking a little tax out of the rest of the populous, your problems will be the same. >> tell us about your colleagues, if they work outside of school, do they tutor or do other jobs? >> most of my colleagues do private lessons, some do something less. all of them do some activity to supplement their income. >> does this happen at every level of schooling? groundinger students, high school students. >> mostly up to the point of the student entering university, sometimes after that. >> what is the average salary for a teacher, and how much does
it cost to live a middle class life in greece? >> once you enter the profession, your salary is around 650 euros, over the years it gets to around 1,000, but never exceeds that. to feed a family of four, everybody, almost everybody, needs to supplement. >> the government proposed changes to the education model. what do teachers think about the changes, and what effect will they have? >> we haven't seen anything concrete coming out of the administration. it's torture for us. we have to wait and see. keep in mind every government in greece who comes into power tries to put their stamp on education and the health system. >> i asked how concern he is about the crackdown on tax evaders like himself. he doesn't seem to worried. he says it's easy for teachers to be found, and accepts his
face, but the new face of taxes will crack down on super wealthy tax evaders, they are better at teachers. >> next, people versus creditors. the greeks came to power promising to end the austerity that the international monetary fund demands stay put. can a compromise be reached. when we come back, i talk to the former governor of greece that asked for the first bail out five years ago, and ended up being thrown out of office.
left from our parents. in 2010 when greece received its biggest bailout the plan was to help the greeks get back on its feet within three years. instead greeks are facing financial ruin and unnerving the economy. the man that netted the first bail out is a former prime minister. this is his story. in 2009 the european union sounded the alarm bells over greece's finances, sending interest rates soaring, hurting the government's ability to borrow money. when a new prime minister took office, hoe found a big hole. papian dray u, the son and grandson of former greek prime ministers responded with the biggest spending cuts greeks
saw. they took to the streets in violent protest. within six months papian dray resign. unemployment in greece shot up from 10% then to 26% today, and talk of a greek exit from the eurozone continued. if that happened financial implosion could damn the recession hit economies and reverberate into your retirement account. to date greece received 240 million euros from the european union and the international monetary fund. greece now doesn't have the money for upcoming payments and may have to default. something that papian dray u says that greece must avoid. he's offered to join the new ultra left prime minister alexis tsipras in a unity government to give him political cover.
i sat with papian dray u during my visit to greece, and he understands the difficultyize faced, but says it has little choice but to cooperate with lenders. i reminded him a lot of pressure and panic that greeks face started with a deficit his government uncovered in 2009. here is what he told me. >> when it happened with greece, we said we would put our house in order. because we were linked to the euro, the question is whether we have the confidence of partners in the european union. >> without getting technical, you asked to trigger a support mechanism. the euro countries said if one of us is in trouble we help out. and you called on the euro zone to trigger that support, and what did you learn.
first of all, the support mechanism didn't exist. we were faced with the fact that we couldn't get on to the market and borrow at viable rates. where do you go to borrow. you end up facing bankruptcy. this is where we needed to create a confidence. there were things we needed to do have the time inside greece, for greece to make the changes, so we could say we are going to make the reforms greece would be more viable competitive and get out of the markets. then we need a show of support from the european union, the joan. this is where a major speak was made by the eurozone partners,
saying it was just problem. >> was it just greece. what was learnt was people in greece worked less, retired earlier. there was structural dangers underscoring how different countries in the eurozone worked, how different greece was, that was the example use. >> first of all, the structural changes we needed to make we were pushing forward. pre-electorally we made pension reforms, open up the different practices, lawyers, mechanics, engineers and so on. so that we could open up the market for a younger generation. we needed time to do this. breathing time. you could see in the advanced democracies it takes years. we had to do this like months, if not years.
this - this is where we needed the support. >> and greek restructuring was going to be a long-term issue. >> at least some years. the third problem was it was felt the problem was the budget deficit, that we had gone way over the master criteria, which was 3%. >> you were over 12. we are over 12 initially, when euro stat came to greece, looking through the books, it took a year and a half. from 3-15.7% is a huge difference. and the previous government, before it left, a few days before the elections, reported gap. >> the party that got the most votes was a party that said the austerity has gone too far, and
we need to pair back on it. at the moment we haven't had much success renegotiating success with that. the i.m.f. said you'll still pay the debt. >> there is a deal to be had with the european union. i mentioned that again and again. yes, we can bargain with partners in the european union. they realise the emphasis on austerity had a negative effect in sidelining, if you like, the priority of reforms. we need, and since we have a primary surplus, or had a primary surplus a few months ago, we don't need more austerity, we need emphasis on the reforms to maybe the economy move and be more competitive. >> what is your sense on how that plays out. you are right, it's a long-term problem, but the world seems to
rare long term future. they are not letting on that they have to do several painful things, things imposed through the government. >> first of all, greece made major sacrifices. for better or worse, we followed a programme which has brought 25% cuts in g.d.p. huge unemployment. and a lot of pain for not only the poor but the middle class that pays high taxes. it's not true that we have not actually made things. what i say again, the emphasis could have been less on cutting the budget quickly and more on pushing the reform. this is where we can find a solution with our partners, they should be less punitive,
obviously, and demand that there be a clear roadmap for how we've us. >> the greek government may be buckling under debt, but there are towns and cities that are solvent and able to pay bills. not surprisingly the government is asking them to keep the country afloat. we have this report from southern greece. >> reporter: it's not every greek village that gets its own surfaced field. this field is in an area where the 3-time mayor managed so well they have there 17 million in the bank. despite subsidies falling, it still feeds its constituents and funds daycare centers. now the greek government is savings. >> the country need our support. we need to know when we won the
money, we'll have it. if we don't we won't be able to buy fuel or food for daycare, pay salaries or pick up rubbish. we will not basics. >> reporter: greece is at odds reforms. >> it's stopped, threeing the country back. >> the longer the talks drag out, the deeper the government has to dig to buy time. it withheld a billion, and borrow add half a billion from pension funds. it's hoping to borrow $2.5 billion more. out. >> it's not just local government that is affected. universities, hospitals, public trusts and libraries must surrender their cash. they lost $15 million when government bonds were discounted three years ago. they are skeptical. >> we know there's a bad
psychology, mayors are afraid the government will take its savings, it wants to give itself financial padding to face the terrible assault from creditors and the us open elite. -- eurozone elite. we have not received abroad. >> reporter: ultimately the mayors will comply g the ship of longer. that is our show for tonight. thank you for joining me, i'm ali velshi. >> we're here to fully get into the nuances of everything that's going on not just in this country but around the world. >> ...as if there were no cameras here, would be the best solution. >> this goes to the heart of the argument >> to tell you the stories that others won't cover.
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