Greece alone as global tax rates fall
At a time when most of the world’s industrialized nations are reducing tax rates – to boost investment and competitiveness – Greece is doing the opposite, a report published on Wednesday by the Organization for Economic Cooperation and Development has shown.
In contrast to the majority of OECD member-states, Greece has raised taxes and social security contributions as government policy is geared toward attaining fiscal targets even though this inevitably has a detrimental effect on the crisis-hit country’s competitiveness.
After the first phase of the global financial crisis and the initial tendency to raise taxes and reduce spending to bolster revenues, most OECD countries introduced growthdriven tax reforms. Greece may be among the EU countries that have introduced radical tax reforms – along with Austria, Belgium, Hungary, Luxembourg and the Netherlands – but it is also the only one among them that increased taxes on labor and corporate profits.
In the 2014-15 period, 25 of the 32 countries for which data is available recorded an increase in tax-toGDP levels. The report by the Parisbased organization cites Greece as an exception to this trend too, noting the country was in recession during that two-year period.
With regard to corporate tax competition, eight OECD memberstates reduced rates in 2017 by an average of 2.7 percent, with Hungary slashing its corporate tax rate to just 9 percent.
Between 2008 and 2016, Japan reduced corporate taxes by 10 percentage points from 39.5 percent and the UK from 28 to 20 percent. Finland, Spain, Slovenia and Sweden cut their corporate tax rates by 5-6 percentage points, in stark contrast to Greece, which together with Chile and Portugal has the highest corporate tax rates in the OECD compared to 2008.
Many countries have reduced income tax and introduced tax breaks, particularly in the lower brackets, with Austria, Belgium, Hungary and the Netherlands also cutting social contributions in 2015-16. Not Greece, which in 2016 raised both, increasing the overall burden on low income earners by 1.5 percent.
Greece was also the only country in the OECD to raise value-added tax rates in 2016.
the report, in contrast to the majority of OECD memberstates, Greece has raised taxes and social security contributions as government policy is geared toward attaining fiscal targets even though this inevitably has a detrimental effect on the crisis-hit country’s competitiveness.