The same people who have shouldered the fiscal adjustment of recent years continue to pay the lion’s share of taxes, with 90 percent of income tax paid by just 19 percent of the population, an event organized by the Economic Chamber of Greece (OEE) on the 2019 budget heard on Tuesday.
According to the figures presented by Vasilis Zoumboulidis, associate professor at the Eastern Macedonia and Thrace Institute of Technology, Greece relies on a constantly shrinking group of individuals and corporations for its tax revenues.
This policy is set to continue in 2019, as next year’s draft budget does not provide for any changes in tax policy for those incomes – which not only pay their taxes but are also behind the bulk of consumption.
Zoumboulidis noted that the primary surplus overrun on which the fiscal policy model has been constructed and the budget is executed shows the following imbalances:
– Just 4.5 percent of enterprises account for 83 percent of corporate income tax paid.
– Two-thirds (66 percent) of property ownership taxation is paid by 33 percent of owners.
– Almost 90 percent of income tax from individuals is paid by 19 percent of taxpayers.
According to Zoumboulidis, a possible reduction of taxpayer’s rates would see the expansion of disposable incomes, consumption and savings. If the tax cuts were to be extended to corporate profits too, the cost of investment would go down, meaning that more entrepreneurs would invest, taking investment higher.
However, the government has abolished the clause that it had passed in 2017 that could have eased the pressure on enterprises which in recent years have been battered: Therefore, instead of reducing the corporate tax rate from 29 percent to 26 percent in 2019, the government is bringing it down to 28 percent next year.
OEE President Konstantinos Kollias told the event that “the first post-program budget does not cease to be an overtaxation budget,” adding that, once again, the middle classes are the ones that will suffer the most.