Greek red tape

The Wall Street Journal:

Critics say a sprawling civil service has tried to secure its own survival through an opaque patchwork of fees, taxes and red tape.

The European Commission estimates the administrative burden of Greece's bureaucracy—the value of work devoted to dealing with government-imposed administration—is equivalent to 7% of gross domestic product, twice the EU average.

That has deterred foreign investors, who could be a potential source of growth now that the Greek economy is being squeezed by austerity measures aimed at avoiding national bankruptcy. Foreign direct investment last year was €3.8 billion, or $5.1 billion—about the same as Bulgaria, a former communist neighbor with two-thirds the population of Greece, according to the United Nations Conference on Trade and Development.

Tourism is Greece's top money earner. But despite the country's magnificent coastlines and ancient monuments, many visitors are young people traveling on a shoestring. Operators trying to attract higher-end tourists say ham-handed government moves have driven business away.

This past August, for example, Athens imposed a new tax on yachts in an effort to close its budget gap. A 43-foot craft under a foreign flag was levied $5,265 a year if it had spent more than 40 days a year in Greek waters since March 2009. For a 98-foot boat, the charge was about $27,000.

The new tax "was a squeeze-the-rich measure, so they just left," withdrawing a much-needed source of crew salaries, port fees, fuel taxes and onshore spending, says Peter Custer, marketing and sales manager at Privatsea Yachting, a yacht-services firm in Athens.

Greece's problem isn't too little revenue, it's too much government. More on the country's bureaucracy nightmare here.