Mid­dle in­comes go un­der knife

Gov’t post­ing sur­pluses via taxes rather than growth at ex­pense of free­lancers, self-em­ployed, wage earn­ers

Kathimerini English - - Front Page -

The dis­pos­able in­come of Greece’s av­er­age earn­ers has been slashed by more than 50 per­cent due to over­tax­a­tion in re­cent years, ac­cord­ing to the lat­est data ex­am­ined by Kathimerini, which also paints a grim pic­ture for the com­ing years.

What’s more, the re­duc­tion of the in­come tax thresh­old is ex­pected to fur­ther im­pact the dis­pos­able in­come of house­holds.

Brus­sels ex­pects Greece’s 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.

How­ever, the pri­mary sur­pluses Greece has posted in the last two years are largely due to ex­or­bi­tant taxes rather the re­sult of growth.

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

Those hard­est hit have been free­lance pro­fes­sion­als, who since 2009 have been sub­jected to un­prece­dented raids by the tax of­fice, and more re­cently by so­cial in­surance con­tri­bu­tion hikes, re­sult­ing in the grad­ual ex­haus­tion of their in­come.

And high taxes, in­clud­ing prop­erty taxes, are the rea­son why both free­lancers and self-em­ployed pro­fes­sion­als sub­mit­ted in­comes last year that were 20 per­cent lower than their ac­tual earn­ings.

A telling ex­am­ple of over­taxa- tion con­cerns free­lance pro­fes­sion­als who own a car and an apart­ment and earn 50,000 eu­ros a year:

In 2009 they had to pay 16,333 eu­ros of their an­nual in­come to the tax of­fice and their so­cial se­cu­rity fund, leav­ing them with a net in­come of 33,667 eu­ros. Five years later, their clear in­come dropped by a fur­ther 4,344 eu­ros to 29,323. The sit­u­a­tion to­day is even more dire as the same self­em­ployed pro­fes­sional mak­ing 50,000 eu­ros must pay 32,151 eu- ros in taxes and con­tri­bu­tions, leav­ing them with a dis­pos­able in­come of 17,849.

Taxes and so­cial se­cu­rity con­tri­bu­tions have rock­eted by 96.8 per­cent since 2009, while com­pared to 2014 they have risen by 55.5 per­cent.

Fur­ther­more, to­day’s dis­pos­able in­comes – after taxes and con­tri­bu­tions are de­ducted – have far less pur­chas­ing power com­pared to 2009, as di­rect taxes in al­most all cat­e­gories – VAT and spe­cial con­sump­tion taxes – have risen.

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