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Higher taxes in Greece do not increase revenue in  Treasury

Higher taxes in Greece do not increase revenue in Treasury

COPENHEGEN: The increased taxes in Greece are not achieving their goal and actually lead to a reduction of the revenue in the Treasury. This is behind the government’s “successful story” about budget surpluses and social dividends. Although the budget has a larger than expected surplus, the tax revenues, both direct and indirect, do not achieve the targets and are below the level reached in 2016.

SYRIZA said it would work to protect vulnerable households, but it increased indirect taxes to the highest level in the last ten years to 15.1% of gross domestic product (GDP).

Under the pressure from creditors, the Greek government has increased tax rates, excise duties, and has abolished many tax cuts. For example, the practice of a reduced rate of VAT for islands has now been halted.

Thus, the direct tax revenues in the country reached 17.59 billion EUR, according to the latest data from the Ministry of Finance, compared to 19.25 billion EUR in 2016. The government’s expectations were to increase tax revenue by 1 billion EUR with measures in its tax reform.

The revenue from corporate taxes is 2.81 billion EUR, with an estimated 3.04 billion EUR and revenue of 3.18 billion EUR in 2016.

According to the Organization for Economic Cooperation and Development (OECD), Greece is the country with the highest tax increase in 2016. In total, tax revenues amounted to 38.6% of GDP, increasing by 2.2 percentage points last year.

However, leaders in the ranking are Denmark and France, where tax revenues are above 45% of GDP in 2016.

The governor of the Greek Central Bank, Yannis Stournaras, also recognizes the risk of higher tax rates. He commented that they are a threat to economic activity. According to data from the central bank in

2017, the Greek economy partially managed to return to its positions in 2015. The economic upturn can be improved in the future. The government must also complete its latest fourth rescue program review in order for Greece to return to the capital markets quickly after the end of the program in August 2018.