Deputies participating in the Parliamentary Committee for Financial Affairs were warned yesterday that the 2018 draft budget continues to overtax Greek taxpayers and that ‘the persistent seeking of primary surpluses above the official target’ could entail excessive austerity and have a negative impact on growth.
Greece ranked first out of 35 OECD countries in tax hikes last year, according to a report by the Organization for Economic Cooperation and Development, and the budget for 2018 will lead to an even greater tax burden that will stifle growth, the Parliament’s Budget Office (PBO) warned on Thsurday.
According to the OECD report, tax revenues in Greece increased by 2.2 percentage points of gross domestic product within a year, growing from 36.4 percent of GDP in 2015 to 38.6 percent in 2016, while the average tax growth rate among the 35 OECD member-states stood at just 0.3 percent (from 34 to 34.3 percent) in the same period.
Crucially, in the last couple of years there has been an increase in indirect taxes as a ratio of all taxes, with the balance of indirect/direct taxes shifting from 1:18 in 2016 to 1:33 in 2017.
Greece now ranks 10th among the countries with the highest ratio of tax revenues per GDP, based on 2016 data. In 2015 Greece was in 15th place. Greece will climb further in the next report on the issue as it will factor in the new hikes in indirect taxation imposed in the last few months as well as the increased social security contributions that apply as of this year.
Worse is set to come from next year, the PBO’s scientific committee warned yesterday, as the 2018 budget was evidence of its concern over “the persistent seeking of primary surpluses above the official target” that entail excessive austerity and have a negative impact on growth.
“Seeking primary surpluses that are more than what is needed means greater austerity and the creation of suffocating conditions for the market and economic activity in general,” the head of the PBO, Panayiotis Liargovas, told the competent parliamentary committee on Thursday. “The more we seek higher surpluses through increased taxation, freezing public investments and curtailing expenditure, the smaller the growth rate will eventually be,” he added.