FINANCE

Lightening burden on families

After being fourth in the OECD in charges on households in 2019, Greece has eased the load

lightening-burden-on-families

The taxpayers who bore the brunt of austerity measures in the previous decade, during the fiscal streamlining of the bailouts period, have finally had their load reduced through the measures applying since last year in terms of their tax and social security obligations.

The reduction of social security contributions, the suspension of the solidarity levy (that will apparently be abolished in 2023), and changes to tax rates have bolstered the incomes of salary workers since 2020 during a particularly difficult period.

Therefore the tax and social security burden that amounted to 37.1 cents of each euro of income in 2019 for a family with two children (compared to an average rate of 24.4% among Organization for Economic Cooperation and Development member-states) is now expected to have dropped significantly when the 2020 income data are published. Experts estimate the decline will be considerable, by some four to five percentage points, taking the sum of the tax and contribution load down to almost 32%.

According to the Tax Foundation data presented on Thursday by the Markos Dragoumis Center for Liberal Studies (KEFiM), up until 2019 Greece ranked fourth among the 36 OECD countries surveyed in the taxation of workers with children, trailing only Turkey, France and Sweden.

In the year before the pandemic, a worker without children paid 40.1% of their gross income toward taxes and contributions in Greece, against an OECD average of 36.1%: Income tax came to 8%, the contributions withheld from the salary amounted to 12.5%, and those paid by the employer stood at 19.7%.

Unlike most countries with a high tax burden on salaries, Greece does not offer families with children any notable tax breaks. Many Greek households not only pay their taxes but also pay another 1.85 billion euros out of their own pocket for their children’s education, or an average of €3,200 per household per annum.