We see it a lot here, because our country is full of bureaucratic issues. It is full of overlapping processes, it is full of rules. It is a typical example of the reasons why we have informality. So, rules are conflicting with each other, they are overlapping with each other, it is rather hard to do enforcement of law, there are always new ways to come up with a new rule or a new regulation. People are confused. People do not really know exactly which way they should go about. However, there is an interesting concept. Greece is a country that has a very high level of education and a very, very good set of people. People are working. The reasons why things get to be so complicated, so cumbersome, so difficult is because a lot of times the rules have been generated from the top to the bottom, historically. And the only way to resolve informality is to go and understand exactly how and when the first break took place. Why did we have this first break between the people that decided to work in informal ways and the actual state of governments that lived in an island? So, in Greece we do have informality. It comes from the fact that in the 1800 we adopted legal structures that did not come from us although they originated from the ancient Greece. In the 1830s we received the Civil Code of the German tradition and the Commercial Code of the French tradition which were developed for different societies. Similarly, the same occurred in other Eastern European countries and then there was a clash. And the clash is between distinct rules that do not meet the needs of the people. And then people underneath begin to operate in regular every day informal ways that are mainly based on reputation. That is why to be informal it requires high level of trust and high level of reputation. You can not be corrupt and be informal, because then the people that work with you, in your community, in your society will not be able to continue working with you. So, in Greece we do have a level of informality in many aspects. For example, it is very difficult to issue licenses to operate a business. There are too many licenses. You see a lot of business that have a few of the licenses in the beginning to open the business but they do not have the full license. And there is an understanding from the state that this happens because of bureaucratic problems. So, the reason that allows for the business to open although not the full set of permits is out there and in a way it invalidates the reason of having a permit.
Is tax evasion informality?
Tax evasion is a problem of its own. As I said to you answering your previous question, if you have informality you remain in survival mode. Survival mode means I want to take care of my family, my immediate family, and maybe one or two of my people in the expanded family. That is I do not really have the energy to worry about the neighbour’s family or the family of somebody in another community. That is, unfortunately, the reason why the concept of paying taxes is not very well elevated. People think that “Why should I pay taxes for the rest of the country when in reality I still have to have a private health insurance, still have to pay my own doctor, and every time I drive the roads the roads are really bad. I still have to go to private schools.” So, they feel there is a proceeding of the taxation in so many ways that they do not have the incentive to pay taxes. On the other hand, however, the problem in this country is mainly the fact that a lot of people do not declare at all the fact that they work here. So, it is not an issue of tax evasion. It is more an issue of informality than an issue of tax evasion. The system, the formal system is not fully capable of generating a trust to the individuals that is needed for the benefit of the common to be able to pay. So, who really pays in this country? The salary earners of the public sector, the salary earners of a regular company but not really individual entrepreneurs, like film makers or others. There are plenty of people that have a lot of money but they do not care to be even registered in the tax authorities. They make money abroad and keep it abroad. So, that is really a challenge that we have to change. The challenge is to manage to establish a trusted behaviour for the better of the common.
Informality and illegal buildings in Greece – how do these two things relate with each other?
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