Canceling tax discount reduction will do little to diminish burden

Canceling tax discount reduction will do little to diminish burden

The state budget would require a primary surplus overrun of 5.5-6 billion euros for income tax rates to be brought back to the levels last seen at the end of 2014.

The suspension of the reduction of the tax discount – as Prime Minister Alexis Tsipras promised earlier this month – would cost some 2 billion euros per year. Yet even if that happens another 30 tax measures will still remain in place, many of which concern indirect taxation, which is the same for all incomes and inhibits consumption.

The fact that the average Greek salary worker with two children suffers the third heaviest tax load in the world, according to the latest survey by the Organization for Economic Cooperation and Development, or that Greece is among the three most expensive countries in which to buy gasoline in Europe, can be attributed to measures passed since 2015.

Besides the value-added tax rate hikes, the shift of various commodities from the medium to the high VAT bracket, and the jump in many special consumption taxes, the government has introduced a series of creative measures for tax collection in the last four years: They include the accommodation tax (74 million euros per year), the coffee levy (62 million), tobacco tax hikes (142 million), beer tax (49 million) and the special charge on landline telephony (65 million euros). There has even been a levy on pay-TV subscribers, which fetches 24 million euros per annum.

On direct taxation, even without the legislated reduction of the tax-free threshold, income tax rates have risen to such an extent that taxes eat up to 55 percent of incomes, including the solidarity levy, whose rates have risen twice in the last four years. The abolition of tax exemption for various expenses has been particularly costly for taxpayers, such as the end to the exemption of medical costs from taxation, which has set Greeks back 121 million euros per year.

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