Greek citizens continue to pay among the highest social security contributions in Organization for Economic Cooperation and Development (OECD) countries, while consumption and property taxes remain high too, according to a Tax Foundation study. On the contrary, revenues from the income taxation of individuals and corporations are significantly lower than in other OECD member-states and most European countries.
Revenues from individual taxpayers amount to 15.8% of total state takings in Greece, while the OECD average stands at 24%, Portugal’s rate is 19.9%, Italy’s is 26.9% and Spain’s 23.8%. Of course the low tax revenue rate may well be the result of tax evasion, mainly among freelance professionals, and of the low rate of collection, as the timely payments of income tax range between 70% and 72%.
Despite the reduction of contributions by 3.9 percentage points in the last few years, Greece continues to collect about a third (33.2%) of revenues from social security payments, while the OECD average stands at 26.4%.
Compared to other countries, Greece also has considerably higher property taxation and therefore increased takings, accounting for 7.9% of total state revenues: The OECD mean rate stands at just 5.6%. However, it is in consumption taxation that Greece is the undisputed leader, and the recommendation by the Tax Foundation for a swing toward indirect taxation as less distorting for economic activity makes no sense for Greece. Value-added tax, special consumption taxes and other levies fetch 38.5% of all state revenues, which is 6.5 percentage points above the OECD average.
The study also notes that the OECD favors a shift in the mix of tax revenues, from income tax takings to consumption and property, the very sources of most state revenues in Greece and those that put this country at the top of the list of takings.
The comparative analysis of the Tax Foundation shows that income taxation can generate more damage to economic activity than taxing property and consumption.