Greek growth’s death by taxes

Dis­pro­por­tion­ately high tax­a­tion en­cour­ages il­le­gal econ­omy and eva­sion, and cre­ates ex­ces­sive sur­pluses

Kathimerini English - - Focus -

Euro­pean Com­mis­sion­statis­tics point to the dis­pro­por­tion­ate in­crease in tax­a­tion in Greece, at a time when the econ­omy was shrink­ing, while the coun­try’s in­dus­tri­al­ists and po­lit­i­cal op­po­si­tion say over­tax­a­tion has led to more tax eva­sion and the fail­ure of the tax sys­tem.

Data in­cluded in the fall fore­casts of the Com­mis­sion show that di­rect tax­a­tion on in­come and wealth has risen to 10.2 per­cent of the coun­try’s gross do­mes­tic prod­uct this year, from 9.4 per­cent of GDP in 2009. Given the dra­matic con­trac­tion of the coun­try’s GDP over the last eight years, the load on tax­pay­ers is ex­ces­sively heavy.

Ac­cord­ing to the re­port, the taxes Greeks are asked to pay this year on in­come and wealth add up to 18 bil­lion eu­ros, against 20.3 bil­lion in 2009, while taxes on out­put and im­ports have risen to 31.7 bil­lion from 27.8 bil­lion eu­ros eight years ago.

Brus­sels ex­pects the pri­mary sur­plus to beat its tar­get of 3.5 per­cent of GDP again next year, ris­ing to 3.9 per­cent, and then to 3.7 per­cent in 2019, as a re­sult of the over­tax­a­tion.

On Thurs­day the Hel­lenic Fed­er­a­tion of En­ter­prises (SEV) again re­peated that the ex­ces­sive tax­a­tion only serves to in­crease tax eva­sion and “kill off” growth, ask­ing for taxes to start de­creas­ing im­me­di­ately after the end of the bailout pro­gram next Au­gust, so as to boost eco­nomic ac­tiv­ity.

The tax sys­tem has failed, as to­day Greece has an il­le­gal econ­omy es­ti­mated at 40 bil­lion eu­ros, tax eva­sion of 12 bil­lion and a dis­pro­por­tion­ately high num­ber of low de­clared in­comes, claims Ste­lios Pet­sas, a fis­cal pol­icy ad­viser to New Democ­racy leader Kyr­i­akos Mit­so­takis.

Ad­dress­ing a tax fo­rum in Athens yes­ter­day, he added that the re­duc­tion in the value-added tax gap was 734.12 1.1654 re­versed in 2015, show­ing that in­creas­ing taxes fetches the op­po­site re­sults, and that this is a vi­cious cy­cle that should be bro­ken.

Pet­sas said the ex­pan­sion of the tax­payer base along with tax cuts will bring about an in­crease in col­lec­tion rates. This, to­gether with the write-off of non-col­lectable debts and the statute of lim­i­ta­tions for old cases that are at least five years old are the first pri­or­i­ties of New Democ­racy.

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