30 May 2012

Christine Lagarde accused of hypocrisy on tax

Head of the International Monetary Fund, Christine Lagarde has been the subject of a tempest of criticism after blaming Greece’s economic crisis on citizens who avoid paying tax

Following an interview in the Guardian in which Lagarde said Greeks could help themselves ‘by paying all their tax’, several national newspaper ran stories accusing French economist of hypocrisy given she herself pays no tax on her $467,940 (£300,406) salary and $83,000 (£53,276) additional allowance.

Lagarde castigated Greeks who expect any sympathy over the stringency of the IMF austerity programme. Asked if she thought Greeks had “had a nice time and it is now payback time”, Lagarde answered, “that’s right”.

“As far as Athens is concerned,” she added, “I think about all these people in Greece who are trying to escape tax.”

As a diplomatic official working for the United Nations, Lagarde is exempt from taxation under the 1961 Vienna convention, as her predecessor before her and other UN officials are too.

But her unsympathetic comments have initiated outrage given claims of her own tax free status.

An IMF spokesman has responded that Lagarde “pays all taxes levied on her, including local and property taxes in the US and France.”

Some commentators have noted that, in the words of CNBC’s Catherine Boyle, “the problem of tax avoidance she [Lagarde] described in Greece is systemic and structural, and acknowledged by many as a key cause of the country’s current problems”, regardless of the sensitivity of her remarks.

Christine Lagarde herself has subsequently responded on social network Facebook that she is “very sympathetic to the Greek people and the challenges they are facing”, but resolved that an important part of overcoming the financial crisis is “that everyone should carry their fair share of the burden, especially the most privileged, and especially in terms of paying their tax”.


Tom Stevenson