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Greek FinMin believes Greeks have to pay even more taxes

Beginning of the week Greek Finance Minister Yiannis Stournaras created confusion, not only among the people but also among his political colleagues in the parliament. In an interview, Stournaras had claimed that “Greeks were not overtaxed” as often complained by the media and the average taxpayer: the employee, the low pensioner and even the jobless.

Stournaras in firing line for arguing Greeks can pay more taxes

Tax is one of the most sensitive issues in Greece at the moment as result of four years of repeated hikes so it was no surprise that Finance Minister Yiannis Stournaras’s insistence this week that Greeks are not overtaxed caused a political ruction.

Stournaras made the claim in a TV interview at the beginning of the week and then repeated his assertion when questioned about it in the following days. His insistence drew criticism from government ranks as well as opposition parties.

The backlash against his comment stems from the fact the finance minister was not cautious with his words. While his comment was interpreted as a suggestion that direct and indirect taxes should increase, in fact what he meant was that Greeks as a whole do not pay enough tax. He cited figures that show tax revenues in Greece accounted for 22.8 percent of GDP last year, compared to a eurozone average of 25.7 percent.

In this respect, Stournaras has a point: Overall revenues suggest there is more to come from Greek taxpayers. However, it should be pointed out that two of the key reasons that revenues are below the eurozone average are the inefficiency of the tax administration and the continuing deep recession. Both of these factors have more to do with the actions of the Greek state rather than whether citizens are being taxed enough. Critics will argue that the onus is on the finance minister and his colleagues to address this, rather than to expect more from taxpayers.

Stournaras admitted that part of the problem is that the “usual suspects,” as he called them, are being called on to carry the tax burden. An OECD report reminded Greece this week that while salaried professionals and pensioners are facing large tax bills, the government is only collecting half of the amount it should from the self-employed. The Paris-based organisation estimates that the Greek government is missing out on 3.2 billion euros, equivalent to 1.75 percent of GDP, each year.

Despite Stournaras’s recognition of the uneven distribution of tax obligations in Greece, the damage had already been done. His original comment was interpreted as a suggestion that Greeks should pay higher taxes. At this point it is worth underlining again that Stournaras is the only technocrat in the Greek government and perhaps less conscious of the political consequences of what he says. (read full article

No worries, Yiannis! The usual suspects will be continue to be overtaxed as long as the Finance Ministry lets tax evasion prevail and lists with big scale tax evaders remain sealed in dusty drawers.

As of 1.1.2014 the tax-free basic amount – currently at 5,000 euro per year – disappear for self-employed, employees and pensioners will continue to be taxed according to fictitious criteria of “deemed income”.

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  1. Sorry! But I won’t bet able to pay anymore tax to help pay back the Greek debts. There is nothing else left to cut back on. I know other pensioners in the same situation.