Greece alone as global tax rates fall

Kathimerini English - - Focus -

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.

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