Greece shows dire consequences of failure to tax wealthy

• Source: Global Times
• [08:05 May 06 2010]
• Comments

The economic consequences of the failure to tax the rich are also clear. Tax loopholes weakened fiscal revenue, caused Greece's over-dependence on debt, and eventually plunged it into crisis.

What's worse is that, past tolerance of tax fraud by the rich has turned them into spoiled children who even when their country is at risk are reluctant to save it.

China is not another Greece. Regarding the issue of effectively taxing the rich, China has up to now done much more.

However, the basic situation that income tax revenue from them is incompatible with their income and wealth hasn't been fundamentally changed.

It might be more difficult to monitor the incomes of the rich, but there are ways. For example, disguising a luxurious villa is far more difficult than covering up the monthly income.

If property tax is levied on possession of the villa rather than the income that has been spent to buy it, and if inheritance duty is charged when the villa is inherited by the owner's offspring, social fairness can be better achieved.

As long as we can wake up to the alarm signals from Greece, we can introduce the necessary taxes before it's too late.

The author is an associate professor at the School of Economics, Sichuan University. jiawen1128@yahoo.com