The policy of overtaxation sets Greece apart from most countries, the majority of which have been going in the opposite direction, reducing the burden on taxpayers and enterprises to boost growth and competitiveness.
Taxes and social security contributions have jumped in Greece in recent years, especially in 2015 and 2016, taking it to the top of the corresponding chart of the Organization for Economic Cooperation and Development’s (OECD) 34 member-states.
In its latest report, titled “Tax Policy Reforms 2018” and released on Wednesday, the international organization notes that tax revenues in Greece as a percentage of gross domestic product climbed by three percentage points in 2015 and 2016, with the Netherlands a distant second with half that increase.
In the decade from 2007 to 2016 Greece was also the leader in tax hikes among the OECD states: The index of taxes per GDP showed an increase of 7.4 percentage points in Greece, with just four other countries (Argentina, Mexico, Slovakia and Estonia) recording an increase of more than 3 percentage points in the same period. Half of the 34 states reduced their tax rates between 2007 and 2016, led by Ireland, which brought its rate down from 30.4 percent to 23 percent, mainly thanks to its major GDP growth in 2015.
The report notes that, in contrast to the majority of OECD member-states, Greece has been constantly increasing taxes and social security contributions, making it a unique case.
The inevitable outcome of this policy is that Greece’s competitiveness is downgraded. The rates for all existing taxes have increased and many new consumption taxes have been introduced in areas that until recently were tax exempt, such as pay TV, coffee, fixed telephony and internet connection.
Greece is also among the countries with the highest property taxation, while the country is bucking the international trend toward reducing the tax load on employment through income tax and contributions.