ECONOMY

The Greeks’ tax burden is way up, says Eurostat

Greece’s overall tax burden soared in the 1995-2001 period even as the EU overall reported a slight decline, a survey by EU statistical agency Eurostat showed yesterday. Six years ago, the Greek tax-to-GDP ratio at 32.6 percent was the lowest in the EU, the report noted. The increase to 36.8 percent in 2001 was the second-biggest among EU member states. The tax-to-GDP ratio, however, was the fourth lowest in the EU in 2001. The majority of member states posted an increase in the tax-to-GDP ratio between 1995 and 2001, Eurostat pointed out. «This long-term increase in the overall tax burden is closely related to the growing share of the public sector in the economy,» it said. It blamed higher government spending and increased social welfare costs for the bigger tax burden. «Taxes and social security contributions have been raised to finance government spending and, in particular, labor taxes have been increased in order to finance social welfare commitments as regards pensions, healthcare, education and other social benefits,» Eurostat noted. Direct taxes in Greece accounted for 28 percent of total tax revenues in 2001, up from 23.8 percent six years ago, the survey showed. The government’s heavy dependence on consumption taxes and social security contributions to fill the state coffers was underscored in the share of indirect taxes amounting to 40.8 percent. It marked a slight decline from 44.1 percent over the six-year period. While a number of EU countries trimmed taxes in some categories, Greece jacked up taxes on consumption, labor and capital, indicating frantic efforts to raise revenues to fund a ballooning public sector and pay off public debt. The implicit tax rate on consumption jumped to 21.2 percent from 18.4 percent, the rate on labor rose to 36.5 percent from 34.4 percent and on capital to 15.5 percent from 10.8 percent. The data also underlined a worrying trend for the EU, with social security contributions making up a third of total taxes for most of the member states. In Greece, social security contributions accounted for 31 percent of total taxes in 2001, a figure that is likely to soar in the coming years as a result of adverse demographics.