The Dictionary of Debt (VII): Spread, Taxation, Tax Exemptions, Unemployment

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Spread (difference in interest rates):

In the current crisis, this term primarily means the difference between the interest rate paid by an EU country borrowing money, and the rate paid for equivalent borrowing by Germany. It represents the premium paid by Greece to investors who prefer Greek from German bonds.

Before Greece fell prey to the markets the spread was very small. These days it has rocketed up to 14% for some categories of bonds (meaning that if Germans borrow at 3% we borrow at 17%). Just like the CDS (see CDS), the spread presents a prime opportunity for every sort of speculator to enrich themselves on the back of the people. Characteristically, the head of the investment fund Marian stated: “Our job is to make money and not to think what will happen to Greek citizens. In any case, there isn’t any law that states one cannot exploit an idiot”.


The main way in which states gather the revenues needed for their operations. During recession, economic activity slows down, so tax revenues fall, making deficits larger. There are two main types of taxation, direct and indirect.

Indirect taxation is mainly the imposition of VAT and Special Consumption Taxes on goods and services bought. If, for example, two people, A with an income of 1000 euros and B with an income of 5000 euros, buy the same product worth 100 euros, the indirect tax paid (the VAT) is 23 euros for both of them, i.e. 23% of the price of the product. However, the burden relative to their income is different; for A it is 2.3% of his income, whereas for B it is 0.46%. So, when indirect taxes are raised (this happened repeatedly since the onset of the Greek crisis), lower incomes are most pressed; this contradicts the redistributive character that a taxation system ought to have.

Direct taxes are those levied on individuals and companies. A progressive income tax system has redistributive character. However, a look at the tax income of the Greek state shows that it redistributes wealth from the poor to the rich. In 2010 individuals paid 9.4 bln in direct taxes, whilst companies paid only 3.2 bln. For 2011 the equivalent numbers are 10.6 bln and 2.8 bln, while the 2012 numbers are even worse, as the Mid-Term Austerity Plans promises 2.1 bln taxation of companies, while individuals will pay 11.1 bln.

Tax Exemptions:

Various business sectors have permanent tax exemptions, such as the shipping industry, the banking sector, and the church. They pay much less tax than we do, relative to their actual profits. Furthermore, official taxation for businesses is 20% (down from the 45% of a few years ago), while if tax exemptions are included this falls to 15.4%. Church property is taxed at just 0.5%, whereas an average  civil servant is taxed at 24%.


The “inability” to find employment for a person willing and able to work. More and more people experience it in Greece, in Europe and throughout the world due to the crisis. Official unemployment in Greece was 14.8% for 2010 (733,645 persons out of the 4,967,410 who form the labour force), compared to 10.2% in December of 2009. In the 15-24 age group the unemployment rate reached 40%, and has gone over 50% by now. Official unemployment in the third quarter of 2011 was 17.7% in comparison to 16.3% for the same quarter of the previous year. In 2012 the unemployment rate is expected to surpass 20%. For 2011 the total number of those employed was 4,233,765, whereas the economically non active persons were, due to the crisis, more, that is 4,343,149.

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Pamphlet created by Christina Laskaridis and George Papalexiou, 2/7/2011; Version II created in January 2012.