Excessive taxation bolsters black economy

Excessive taxation bolsters black economy

Overtaxation pushes economic activity underground and kills honest entrepreneurship, says the Hellenic Federation of Enterprises (SEV), stressing that salary workers and pensioners have shouldered most of the burden in recent years while efforts to uncover undeclared taxable income and assets have failed.

The federation’s weekly bulletin explained that the accumulated tax and social security obligations to the state now amount to 120 billion euros, with half of the country’s taxpayers in arrears.

PricewaterhouseCoopers data show that Greek corporations face the sixth highest tax to pretax earnings ratio – including taxation on corporate profits, on labor and other levies – among 32 European countries. Greece’s rate stands at 50.1 percent while the European average is 40.3 percent. This breaks down to 22.4 percent in tax on corporate profits and 27.7 percent related to employees (taxes and social security contributions), which are the fourth and 13th highest rates respectively in Europe. In 2009 those rates stood at 13.9 percent and 31.7 percent, for a total ratio of 47.4 percent.

The SEV analysts speak of an unfair mode of taxing salary workers and pensioners in Greece, when, as they note, “self-employed professionals, taxpayers benefiting from agricultural activities, rents, interest, shares capital etc declare incomes that are insulting for all of us.”

SEV adds that taxpayers with annual incomes of up to 10,000 euros – i.e. a third of Greeks – paid 7.5 percent of the taxes the state collected last year, while the remaining 92.5 percent, or 8 billion euros, came from the 67 percent of taxpayers earning more than 10,000 euros per year.

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