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Greece tax burden reaches new settlers

By Dave Gilbert, CNN
October 13, 2011 -- Updated 1625 GMT (0025 HKT)
Retirees Bob and Anna Scott now regard Crete as home but face increased taxes
Retirees Bob and Anna Scott now regard Crete as home but face increased taxes
  • Retired couple face extra property tax of €500 ($690) in the next year
  • European Commission says Greek debt for 2011 stands at nearly €353 billion ($487billion)
  • Swimming pools, big cars and houses are being targeted to raise extra cash
  • Greece has teetered on the edge of defaulting on its debts

London (CNN) -- A petty crime sealed a final decision to retire to the Greek island of Crete -- but it could be legitimate government action to rescue Greece from economic melt-down that eventually forces Bob and Anna Scott back to the UK.

Lured by the Mediterranean diet and climate, the couple moved to the village of Kokkino Horio in western Crete from Gloucester in 1997. The burglary at their UK home was enough to seek a permanent move to a country known for its friendly welcome.

"There was no crime here in those days... and it's still the case," said Bob who recounted the story of leaving a camera in a taverna and returning the next day to find it still hanging on the back of the chair where it was left.

Initially they rented but seven years ago they bought a plot of land, built their own home, learned Greek and settled.

The couple still love the people and the country they have adopted but Bob paints a picture of a nation in a mess -- one where strikes are commonplace, officialdom is mistrusted and illegal payments and tax evasion are part of everyday life.

However, the medicine needed to fix it could force out those who have retired to a country which is imposing higher taxation to rid itself of a chronic debt problem.

According to Eurostat, Greece owed more than 140% of its annual GDP in 2010, and the country is currently reliant on a huge bailout. The European Commission says Greece's projected debt for 2011 stands at nearly €353 billion ($487 billion).

Bob and Anna say they are facing an extra property tax of €500 ($690) next year and for the moment they say they can manage, but accountants are already sending letters to their clients warning that there may be more taxes on the way.

Another British couple, Roy and Kate Cooper, who have also settled in Crete, say future tax increases may hit some ex-pats quite hard, particularly those on pensions.

"Luckily we haven't got a swimming pool or big house or big car which are being targeted to raise extra cash," said Roy.

As well as extra taxes, the Greek government is working hard to stamp out tax evasion and reform public pensions. According to the Greek finance ministry's figures, last year it seized 555 yachts and imposed fines of €3.4 billion ($4.7 billion).

But Bob Scott says he continues to see regular evasion, explaining that shops may charge €25 ($35) for a purchase but give a receipt for €15 ($21) or no receipt at all. And he says many workers will ask for a small cash bribe to carry out a favour.

"Graft is a way of life," said Bob. "People are looking for it. We've got used to it but we don't pay backhanders to people if they ask."

Despite the frustrations, the couple are sympathetic to the plight of the Greek people and understand their anger.

"The current situation is driving most people to distraction because they realize the things being imposed on them are punitive -- absolutely nothing is being done to promote growth," said Bob. "They see people at the top getting away with what they perceive as blue murder.

"There are so many good things about this place. The people are very nice, friendly, helpful and generous when they know you. We really enjoy it here and we wouldn't want to go back to the UK unless we were forced to."

However, the couple believe an increased tax burden on their UK pension, which is their only income, could make it a possibility.

The prospects for Greece are not promising. It has teetered on the edge of defaulting on its debts and the population is resentful of the austerity measures introduced so far. There are frequent protests and a public sector strike last week brought the country to a standstill.

And there are other problems. According to Bob, local hotels have pegged their room prices for three years, but he said taxi driver strikes leave tourists stranded at the airport, and extra taxes could further discourage visitors and drive away those who have already moved to Greece and spend their money there.

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