Seven months after the EU bailout, Greece is still struggling to formulate a fiscal policy that doesn't hinge on selling non-existent olives. How can the country's economy move forward? By looking to the past, writes Financial Times columnist John Plender. Specifically, to Rome and 17th-century France. Explains Plender:
Tax collection has, in the past, been one of the most corrupt functions in a dysfunctional Greek state. So the present government's forecasts of much increased revenue have met with scepticism. It may thus be time to consider a wacky but nonetheless practicable proposal--to reform the collection process by introducing, on an interim basis, tax farming.
Plender acknowledges the collection method has a less-than-stellar two thousand year track record.
In the Roman empire it gave rise to abuse because the private individuals who made an upfront payment to the state in exchange for the right to collect tax mistreated the citizenry, to bolster profits. Augustus and Diocletian had to curb such abuses. The same problem arose in 17th and 18th century France, where tax farmers were the biggest employers after the army and navy. Many of their employees were paramilitaries with the right to search households on the mere suspicion of evasion.
These powers were so abused that tax farmers were intensely hated. In the French Revolution many were guillotined, including Antoine Lavoisier, the father of modern chemistry, who financed his scientific research from his activities as a tax farmer and banker.
But all guillotining aside, this could be just what Greece needs. Centralized tax collection, as Plender notes, works only in places "where the state is reasonably efficient." Greece is not that place. Letting the private sector "bid for the right to collect taxes in a competitive tender process" could hardly result in fewer collections. And if doesn't work out, there's always that France thing.
This article is from the archive of our partner The Wire.