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OECD Greece report: High taxes and almost nonexistent benefits

Over taxation of low and medium incomes, low wages, non existing benefits, a poor education system: these are the key words in chapter “Greece” as presented by the Organization for Economic Cooperation and Development (OECD) in its Going for Growth 2018 report beginning of the week. the international organization takes for granted the broadening of the tax-free basis that will tax also the poor.

According to the report, families in Greece with an average monthly salary of 900 euros pay particularly high taxes in return for an almost nonexistent benefits policy and a poor education system.

Meanwhile the country has the third highest tax rate in the European Union for medium and high incomes, which in the last few years have faced an ever increasing tax bill, Eurostat data show.

By contrast, the majority of OECD and eurozone countries have been constantly reducing their tax rates, both for individuals and corporations, while improving social benefits.

A closer look at the data presented on Tuesday by the OECD in its “Going for Growth” report and Eurostat indicates that Greece resembles a Scandinavian country in terms of taxation while remaining firmly in the Balkans as far as benefits and education are concerned.

Last year Greece had the fourth highest tax rate for individuals across the EU. Combined with the solidarity levy, income tax amounted to 55 percent, behind that in Sweden (57.1 percent), Portugal (56.2 percent) and Denmark (55.8 percent). On the other hand Bulgaria has maintained its rate unchanged at just 10 percent since 2008.

Greece runs counter to the rest of Europe, hiking its top rates from 40 percent in 2008 to 55 percent today, as income tax last year came to 45 percent for earnings over 200,000 euros per year plus 10 percent for the solidarity levy.

Taxation on families with children is particularly high in Greece: OECD data provide the example of a couple with two children and an average salary of 850-900 euros per month who pay 38.2 percent of it to the taxman, against an OECD average of 30 percent. In Ireland it comes to 13.6 percent.

It’s even worse for the jobless, who get a benefit of just 40 percent of the average income, against 72.8 percent in Italy and the Czech Republic. The unemployment allowance is 365 euro per month for the total period of only 12 months.

The OECD also stresses the very low quality of the Greek education system based on its PISA ranking, compared to fellow member-states.

On the bright side of Greek life, the OECD reported also of “significant measures to strengthen social protection,” after Greece implemented reforms in 2017.

  • The Economic Policy Reforms 2018: Going for Growth noted that Greece has implemented the Social Solidarity Income at a national level, enhancing the infrastructure for identifying household recipients and the transfer of resources.

The report also states that Greece has made progress in implementing the comprehensive reform of public administration adopted in 2016, which aims at reducing political interference and increasing transparency and accountability and fighting against corruption.

Regarding the electricity market, the OECD states that Greece has established greater competition in the market of electricity generation. It also said that 15 countries have recently reformed their bankruptcy laws.

Greece was also hailed for promoting since 2010 reforms in debt restructuring.

In order to combat black labour, Greece needs to reduce labour tax wedges on low-paid workers where they remain high.

In a parallel statistics development…. Real wages in Greece sank by 19.1%  in the time 2010-2017

via @Nicholas_D

And this is just the average as usual in statistics. In real Greek life, work payments have dropped to 2-3 euro/hour with part-time and rotation contracts to grow each and every day.

Worth noting is the OECD takes for granted the broadening of the tax free basis as of next year, although this measure demanded by the IMF was linked to the achievement of the growth targets.

  • “Greece improved tax compliance and reduced by one-third the tax-free limit for personal income tax – a law that will go into force in 2019,” the OECD report said.

This is for sure a dead certain success recipe for a flourishing economy and citizens in prosperity: taxes like a Scandinavian country, wages like a third world country, benefits and education like a Balkan country

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4 comments

  1. I have a question. The wages are very low 2-3 euros /hour. Why they do not attract companies from around the world for chip labour, this way at least the people they will have jobs again. Like in China. Everybody from around the world they moved their factories/business to China, and look now the Chinese people. They have money and they travel everywhere. Here in Canada you can see Chinese tours all the time. And something else (if I was the prime minister) I will do that. I will start to build in Greece factories/companies under government control and later if someone is interesting to buy the business I will sell to a private sector with a very good deal to benefit the people of Greece. And the most important. To attract business from around the world in Greece I will have the lowest tax rate compare other countries. People we are on the 21st century. Today on this world countries are cooperation/business. I’m not communist, capitalist (capitalist does not work any way from the past 100 years), because benefits only a few people, not everybody. General if people wants to do better things always there are solutions to the problems. Unless if they do not want for reasons. Bye for now and good luck. Everybody we have to fight everyday for survivor like the animals in the forest.

  2. Taxes only count if you pay them.
    Check the OECD tax collection figures… highest unpaid/uncollected taxes in the world. 193% unpaid versus collected ratio, i.e. for every euro collected, 1.93 isn’t. Surprisingly the biggest gap? VAT taxes.

    figure 6.15 and figure 6.17,

  3. the wages paid to workers might be dismally low, but the cost of bureacracy, taxes, endlessly changing regulations, arbitrary fines and ‘penalties’ dreampt up to grab anything the tax man takes a liking to, these things are death to anyone attempting to start or run a business. The only way to really succeed in business in greece is to be close to the party in power at the moment, and this has been obvious to greeks for decades now. All the small businesses, self-employed, farmers, and ordinary people trying to make a living, are of course suffocated in a punishing regime of endless new taxes, fees, and penalties, plus the _way_ all of this is adminsitered in greece, which is itself half the problem, and in the end it all really seemes aimed at protecting the monopoly of those close to power and confiscating anything from the little people which might have thus far escaped their notice or that they decide they might sell on to some foriegners..

  4. ah, the ‘unpaid taxes’ thing in greece, is also because in other countries they arent nearly as imaginative in dreaming up arbitrary amounts ‘owed’ to the state. In other countries there are at least more objective criteria for computing this sort of thing, and those critera are at least a bit more realistic.
    In greece, there is a huge amount of ‘tax’ that is ‘owed’ on ‘income’ which never existed to begin with, but is the so called ‘tekmiria’, the imaginary income (or activity of a business) which is assessed merely because a person exists, or merely because an asset exists. When they started this manifestly dishnoest system close to 40 years ago, it was only on a few uncommon ‘assets’ associated with rich people, and nobody raised any loud objection on the real issue , which was that there were now regulations which insisted upon something patently false. That was the narrow end of the wedge, and now that in the past decade incomes and wealth have fallen through the floor, these ‘tekmiria’ are often more than the real income by a far margin!
    another big category of ‘owed’ taxes is from bakrupt or totally closed down businesses. Walk through any village, town, or city in greece and you will see half to two thirds of all the retail space boarded up, for rent, for sale, or just plain vandalized and left to the elements. In literally several hundred thousand cases, these once upon a time businesses are still technically on the books (because the tax man wont let you _close_ down a business until the back taxes are paid up!!) and of course a big book of accoutns recievable sounds great when youre trying to sell bonds etc, but this is hopeless debt. Big players get these debts forgiven. if you own a football club for example. But a mom & pop general store or bakery in a village, which barely made a living back in the good days? the vast majority of these businesses are private sole proprietorships, not corporations, and so these debts stay on the books in the name of the people… not like an SA/AE that one can dissolve and get soime bankruptcy protection.
    Now they are speeding up the confiscating and selling of peoples homes for this money, again in an arbitrary and unjust manner.
    Until the entire greek state is taken apart and something more just (and a lot less centralized, for real though not with a ‘ministry of decentralization’!! ) , this will only keep suffocating the country.