A Greek man went to his bank manager and said: ‘I’d like to start a small business. How do I go about it?’ ‘Simple,’ said the bank manager. ‘Buy a big one and wait.’

The Greek financial crisis may be happening thousands of miles away from our Kenyan shores, but it is one that warrants keen observation as our “Naomba Serikali” [I beg the government] mentality continues to take root in this country. Teachers, nurses, doctors have all been on strike in the last 12 months demanding higher wages. Private sector employers began to get antsy as labor unions started to light fires under employees’ seats rallying them to ask for higher wages due to the rising cost of living. Yet the few voices of reason get lost in the blaring clamor, those voices that whisper that high wages are unsustainable in the long term and make our country uncompetitive. No one wants to hear the naysayers because the latter spews forth bile and negativity at a time when pockets are empty. What we really need to “omba serikali” is to do everything in its power to keep the cost of living down. For instance, to keep the price of basic food low, Serikali would have to go behind the value chain and determining how the production inputs can be maintained or reduced. Those production inputs include raw materials, electricity, fuel and, of course, labor. One way of reducing the cost of these inputs would be in the form of direct grants in the form of subsidies or outright tax waivers. Of course, only a government that is receiving plenty of revenue from taxing productive areas of the economy can provide subsidies and waivers. Without reducing the cost of living, the barrage of salary increase requests will only continue. Which takes us back to why we need to cast an observant eye at the Greek experience.

The Greeks, simply stated, love eating olives and dodging tax with equal measure. An article in the Mail Online of 24th June 2011 sheds light on Greek excesses. Apparently the Greek are allowed to state their own earnings for tax purposes, which figures are rarely challenged. According to the article, only 5,000 people in a country of 12 million admit to earning more than £90,000 a year (Kshs 11.8 million a year or Kshs 982, 500 a month). Yet studies have shown that more than 60,000 Greek homes each have investments more than £1million (Kshs 131 million), prompting one economist to describe Greece as a “poor country full of rich people.”

Manipulating a corrupt tax system, many of the residents simply say that they earn below the basic tax threshold of around £10,000 a year, even though they own boats, second homes on Greek islands and properties overseas.
Even more incredibly, Greek shipping magnates — the king of kings among the wealthy of Athens — are automatically exempt from tax, supposedly on account of the great benefits they bring the country.

The result is revenue inflows that are greatly outmatched by the revenue outflows for the government. If we thought our Kenyan railway system was bad, the Greek railway has an annual income of £80 million from ticket sales, but a wage bill of more than £500 million a year — prompting one Greek politician to famously remark that it would be cheaper to put all the commuters into private taxis. Apparently the average annual salary in the railway company is £60,000 (Kshs 7.8 million or Kshs 655,000 per month) an average that includes cleaners and track workers – which is three times the earnings of the average private sector employee in the United Kingdom.

The icing on this Filo Baklava of a story is that Greek pastry chefs, radio announcers, hairdressers and masseurs in steam baths are among more than 600 professions allowed to retire at 50 (with a state pension of 95 per cent of their last working year’s earnings) — on account of the ‘arduous and perilous’ nature of their work. I’ll stop there. At some point there must have been a severe bout of sunstroke that afflicted Greek politicians and government officials that allowed this insane situation to arise. But the chickens eventually came home to roost as the Government and the Greek parliament have been forced to pass austerity measures that make your bible bashing pastor’s dress code look like swim wear. Kenyans cannot keep increasing salaries for civil servants willy-nilly. It triggers off a domino effect into the private sector and pretty soon we will out price ourselves out of the labor markets. It then becomes unattractive for foreign investors wishing to invest in this economy and also makes our products and services expensive due to the large component of labor costs that go into every unit of production.

The only solution that keeps us in play is by stabilizing and reducing the cost of living, which then makes the shillings in our pocket go a longer way. To do that, the government has to reduce the taxes on fuel, electricity and agricultural inputs such as fertilizers and seeds. The flip side is that to do this, the government has to widen its tax net to make up for the lost income. So the next time your Member of Parliament or presidential candidate asks for your vote, you’d better ask him or her about how they plan to get tax evaders to start paying their dues. For as long as we want to see a growth in the country’s infrastructure such as roads and public mass transit systems, we need to be prepared for the government debt to rise. Someone has to pay for that debt, and I can assure you, it’s you and I through the taxes on our weary backs. Misery loves company, and my presidential candidate has to tell me how he or she intends to add more revenue generators to my tax paying misery bandwagon. Sadly, economic mumbo jumbo is clearly Greek to today’s politicians!

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Twitter:@carolmusyoka