Greece is one of the top five countries in the Organization for Economic Cooperation and Development (OECD) in value-added tax charges and the first in the eurozone, together with Finland.
Indirect tax revenues currently make up about 56.4% of takings in Greece, while direct taxes account for 35.4% (the rest comes from various other sources).
According to recent data from the Tax Foundation, an employee in Greece who is subject to a 40.1% burden on earnings – which is the 14th highest among OECD countries – the total burden, if VAT expenditure is also taken into account, rises to 44.8%, when the average among OECD countries is 40.1%.
In countries where the economy is developed, direct taxes and especially income taxes prevail, while in countries where the economy is developing, indirect taxes are prevalent, as in Greece. This happens because in developed economies incomes are high, with the consequence that the tendency of tax-paying citizens to evade taxes is lower. Therefore, income taxation is more efficient. In contrast, in developing economies the yield of income taxation is small and relies mainly on indirect taxes. [kathimerini]
Greece is a leader in taxing the poor unfairly
VAT, unlike income taxes is a regressive tax – meaning those with lower incomes pay a higher percentage their income in VAT than those with higher incomes.
The more a country relies on collecting indirect taxes eg VAT, the more the poor pay unfair taxes.
It has nothing to do being a developed countries or not but with the political regime (except that they tend to be less democratic). Less democratic countries, or those with right-wing governments tend to favour indirect taxes. The income tax yield is small as the ruling elites in these countries don’t want to pay a higher share of taxes.
Indirect taxes is NOT necessarily an efficient way of collecting taxes. An increase in VAT does not necessarily mean an increase in tax revenues eg. !0% increase on the VAT of books that causes book sales to fall by more than 10% will reduce the tax revenue.
But increases in the VAT of necessities such as food, where the % increase in price will be more than the % decrease in sales, does raise tax revenues.
As I said, it is a very regressive tax that works more efficiency in raising revenue if the consumer is poor or has little choice but to the good.
they still have this “deemed income” tax based on imaginative criteria
Imaginative indeed. For example, unless I have got it wrong, the deemed income based on property is calculated purely on area not market value. Thus a lawyer/doctor with a €1 million house in Kalithea and a €1 million office in Kolonaki can get away with declaring between €10,000 and €20,000 per year without getting stung for additional tax because of deemed income and no questions asked about how he afforded them. A grandmother on a €3,000 per year pension living in a run down old village house on a remote, small island would. I cannot for one moment think that this anything to do with the fact that the majority of people writing the rules are ex-doctors/lawyers?
you got it wrong.
That’s odd. My imputed income is calculated on the area of my house using bands, e.g first 80 sqm at €40 per sqm, next 40 sqm at €65 per sqm and so on. It is increased by 20 % because it is detached. My car is assessed on the basis of its engine capacity, again using bands, e.g. up to 1200 cc it is €4,000 and between 1200 cc and 2000 cc add €6 per cc. I get a reduction based on its age. A base income of €3,000 is added as a single person and I get a 30 % reduction because I am over 65. When I calculate using these figures my calculation agrees with the tax authority, give or take a few Euro. Perhaps I should contact the tax authority and tell them they are doing it wrong?
Obviously you are missing one great benefit of charging High VAT rates is that Tourists pay this as well on their purchases
Organised theft and a protection racket to boot. The agreement is we get services in return. They can’t even run a bath. Well, you wanted more ‘Europe’, this is what Brussels Technocrats dreamed up. The government is the middle man in every transaction. Cashless society here we come.