ECONOMY

Taxes take half of high salaries

taxes-take-half-of-high-salaries

The government will send Greece to the top of the chart among the countries of the eurozone and the Organization for Economic Cooperation and Development (OECD) in terms of taxes withheld from salaries and pensions, with its plans for hikes in social security contributions, income tax and the solidarity levy.

The country risks becoming a case study on how to deter investment, with employers having to bear a heavy burden, to say nothing of the tax burden on employees.

In a public statement Prime Minister Alexis Tsipras recently identified earners of more than 30,000 euros per annum gross as those who would bear the brunt of the measures to come – pending the approval of the country’s creditors of course, and their technical experts have already disagreed with forcing 3 or 4 percent of taxpayers to carry all of the additional tax burden.

Labor costs will rise with the planned increase of the employers’ social security contributions by one percentage point, while the government intends to impose a 42 percent tax on incomes over 30,000 euros per year and a new 50 percent rate on incomes above 60,000 euros. The solidarity levy will also grow for those earning over 30,000 euros per annum.

All this means that a corporate official, for example, who makes 80,000 euros per year gross will cost his or her employer 99,605 euros after the increase in social security contributions. His income tax for 2016 will grow by at least 1,980 from 2015 to 26,420 euros, leaving him with just 41,580 euros net.

The OECD calculates that no other member of the organization has such a high level of tax withheld from salaried workers.

The above corporate official would have 38,420 euros withheld per year in Greece (not including the social security contributions of his or her employer), while in Belgium that would amount to 34,112 euros, in Italy it would come to 31,595 euros, in Germany 28,198 euros and in Finland 27,714. Ireland, France and the Netherlands withhold no more than 25,000 euros from a professional earning 80,000 euros per year.