A report released Tuesday shows that Greece is among the countries of Organization for Economic Cooperation and Development (OECD) with the highest tax wedge – the difference between before-tax and after-tax wages, including the tax paid by both the employee and the employer.
In the OECD report “Taxing Wages 2017,” Greece had the 14th highest tax wedge among the organization’s 34 countries.
It held the 15th highest position in 2015.
According to the report, the average single worker in Greece faced a tax wedge of 40.2 percent in 2016 – an increase of 1.06 percent since 2015 – compared with the OECD average of 36 percent – a drop of 0.07 percent.
The increased tax burden in Greece was due to hikes in income tax and social security contributions of workers and employers.
In Greece, income tax and employer social security contributions account for 69 percent of the total tax wedge, compared to 77 percent of the total OECD average tax wedge.
The report attributed this to the fact that many OECD countries provide benefits to families with children, either through cash transfers or preferential tax provisions.
Child-related benefits and tax provisions, the report said, tend to reduce the tax wedge for workers with children compared with the average single worker.
Greece had the fifth highest tax wedge in the OECD for an average married worker with two children at 38.3 percent in 2016, which compares with the OECD average of 26.6 percent – a drop since 2015 of 0.08 percent. Greece was in the seventh place in 2015.
Basically, families with two children and one working parent take home 77 percent of their nominal salary compared to the average OECD figure of 85.7 percent.
The greatest burden comes from social security contributions which are about 50 percent higher that the average OECD rate, for both workers and employers.
More specifically, the employer pays 19.9 percent of a worker’s salary for social security – compared to 14.4 percent in the OECD.
The workers pay 12.6 percent of their salary, compared to the OECD average of 8.2 percent.