NEWS

Greece's middle incomes go under knife

TAGS: Economy, Society

The disposable income of Greece’s average earners has been slashed by more than 50 percent due to overtaxation in recent years, according to the latest data examined by Kathimerini, which also paints a grim picture for the coming years.

What’s more, the reduction of the income tax threshold is expected to further impact the disposable income of households. Brussels expects Greece’s primary surplus to beat its target of 3.5 percent of GDP again next year, rising to 3.9 percent, and then to 3.7 percent in 2019. However, the primary surpluses Greece has posted in the last two years are largely due to exorbitant taxes rather the result of growth.

Moreover, while the European Commission’s statistics point to a disproportionate increase in taxation in Greece, at a time when the economy was shrinking, the country’s industrialists and political opposition say overtaxation has led to more tax evasion and the failure of the tax system.

Those hardest hit have been freelance professionals, who since 2009 have been subjected to unprecedented raids by the tax office, and more recently by social insurance contribution hikes, resulting in the gradual exhaustion of their income.

And high taxes, including property taxes, are the reason why both freelancers and self-employed professionals submitted incomes last year that were 20 percent lower than their actual earnings.

A telling example of overtaxation concerns freelance professionals who own a car and an apartment and earn 50,000 euros a year:

In 2009 they had to pay 16,333 euros of their annual income to the tax office and their social security fund, leaving them with a net income of 33,667 euros. Five years later, their clear income dropped by a further 4,344 euros to 29,323. The situation today is even more dire as the same self-employed professional making 50,000 euros must pay 32,151 euros in taxes and contributions, leaving them with a disposable income of 17,849.

Taxes and social security contributions have rocketed by 96.8 percent since 2009, while compared to 2014 they have risen by 55.5 percent.

Furthermore, today’s disposable incomes – after taxes and contributions are deducted – have far less purchasing power compared to 2009, as direct taxes in almost all categories – VAT and special consumption taxes – have risen.

Online