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Greeks paid €7bn more in taxes in 2016, as middle-classes vanish and poverty increases

Two out of ten Greeks paid 80% of the total income taxes last year. At the same time poverty increases: more than 340,000 households declared zero income for the tax year 2015. Data released on Thursday by the Independent Authority for Public Revenue (AADE) shows the stifling tax burden and the disproportionate allocation against the social groups that were once the middle-classes.

The data revealed that 70% of the paid taxes came from employees and pensioners who cannot hide their incomes.

  • €59.4 billion came from taxing incomes of employees and pensioners
  • €6.052 billion came from rent income
  • €4.676 billion came from business activity
  • €3.77 billions came from interests, shares etc
  • €1.25 billion came from agricultural activities

According to the data:

17.6% of the households, about one million taxpayers with annual income 20,000 euros paid 77.13% of the total taxes.

At the same time, income declarations of taxpayers with zero income increase by 34.000.

One out of ten households had not even one euro income in the tax year 2015 (tax declaration in 2016).

Five out of then households declared a annual income below 1,000 euros.

Three in ten households had an annual income of 12,000 euros.

Taxpayers with annual income 20,000-30,000 euros paid a total of 1.4 billion euros

513,509 taxpayers with annual income of 30,000 euros or over paid the lion’s share of taxes due to the state’s inability to contain tax evasion, restructure the public sector and make the necessary reforms.

Each time public finances go off course, it is taxpayers with monthly revenues of more than 2,500 euros who are forced to plug the gaps. On average, these people pay in excess of 9,200 euros in taxes per year.

In total, about 6,194,000 taxpayers declared 2015 incomes of 75.1 billion euros to the tax authorities last year. This increased to taxable revenues of 82.1 billion euros following the incorporation of assets used for the determination of undeclared incomes (known as “tekmiria”/deemed income), and the income tax due amounted to 8 billion euros.

The data illustrate that declared incomes fluctuate from year to year according to the state of the Greek economy: For example, incomes expanded when the economy stabilized in 2014, while they shrank the year after that because of the uncertainty and tough austerity measures that followed.

Declared incomes in the last five years have been as follows:

  • 89.1 billion euros in 2011
  • 80.1 billion euros in 2012
  • 71.2 billion euros in 2013
  • 76.01 billion euros in 2014
  • 75.2 billion euros in 2015.

From all this, we can conclude that Greek taxpayers’ incomes crumbled by about 17.9 billion euros in the first two years after the start of the bailout program. In particular Greek salary workers have lost taxable declared revenues of approximately 5 billion euros in the period from 2011 to 2015, while the biggest losses have been sustained by taxpayers in Attica.

For the tax year 2016 (income declaration in 2017) taxpayers will pay more because of the tax basis from 9,636 last year to 8,636 annual income. Unmarried taxpayer with monthly income 700 euros will pay 200 euros more in taxes when compared to previous years.

Should Greece fail to reach the targets in 2018, another broadening of the tax basis lies ahead. From 8,636 euros currently it will fall down to 5,636. The current tax rate for employees and pensioners is 22%.

PS Taxing the poor is the perfect recipe of IMF’s neo-liberal policies.

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  1. PS: Its neo-mercantilism. The IMF is still breaking its neo-liberal rulebook

    IMF’s neo-liberal policies usually include their recipe flexible exchanges to offset the damage they inflict on the economy. Their victims usually recover at the expense of the poor. As for Greece, forget the light at the end of the tunnel (hasn’t it been privatized along with DEI -the electric power company?)

    By neo-mercantilism, I refer to the “economic” policies or institutional arrangements that see net external surpluses both as a source of profits and as a source of power over debtor trading “partners”. The persistent trading surpluses are matched by surpluses of unemployment in debtor nations, which are then exported as cheap labour to the surplus countries. This in turn leaves behind a shrinking tax base, unsustainable debts and pensions.

    There are no internal exchange rates to prevent this and no “more Europe” fiscal authority to transfer resources from creditor to debtor nations to stabilize, finance or prevent such dynamics. Tsipras’ call for a United States of Europe is a fantasy (lets forget about the American civil war) and will only fuel more resentment among taxpayers, particularly the working poor, in Northern Europe.

    So like the mercantilism and the absolute monarchs of 17th and 18th century, Europe overburdens the poorest sections of its populations – from the working poor in Germany, trying to compete with cheaper labour sources, to the unfortunate debtor nations suffering increasingly unfair taxes. The peasants revolt and follow “whatever populist” that can promise a way out.

    With the tax squeeze, there is very little space for middles classes or small business enterprises to exist, and not surprisingly, the political center in not only Greece but the rest of Europe disappears.

    As for Greece, unfortunately (it always ends up with some arbitrary compromise between the IMF and the EU), it will receive the worst ingredients from both of their recipes. The government will swallow the reforms that are always come first and debt relief (however ingeniously it is defined) will always be forever later.

  2. The Cat is right. There is no end to the decline of the deficit counties in the Eurozone. A positive feedback cycle run by Germany ensures that deficits fuel debts, debts fuel austerity, austerity ensures recession, recession ensures shrinkage of the countries’ ability to produce and export, and this, in turn, results in even deeper deficits. Repeat the cycle and you have the perfect spiral of economic death.
    Of course, this is an obvious development that can be understood by an average 12 year old. How come and the mighty elected political elites of the deficit countries cannot understand this and do something about it?
    For me, there is only one answer: a combination of stupidity and corruption – in fact corruption is the dominant factor, as only stupid politicians, can be corrupt: they lack the ability to understand the full implications of corruption.