The Foundation for Economic and Industrial Research (IOVE) and the British Hellenic Chamber of Commerce have conducted and published a study on the great injustices of the Greek tax system. The study shows that 8% of eight employees with annual wages in excess of 42,000 euros declare 28% of taxable income and pays 70% of taxes!
The study, which was supervised by the Ministry of Finances consultant professor Nikos Karavitis, highlighted the state tax collection system’s inability to collect its income, especially from the income tax, which is 4% of GDP less than the Eurozone average. This is mostly attributed to rampant tax evasion which is prevalent amongst freelancers and traders.
Eight out of ten freelancers declare in their tax returns that their income is less than 10,000 euros, with 63% claiming their annual income is less than 5,000 euros. The study also showed that 99% of farmers declared that their income was less than 10,000 euros, with only one out of every hundred farmers declaring a monthly income greater than 400 euros.
The study also revealed 64% of taxpayers are employees and pensioners, who declare 82% of taxable income and pay 78% of taxes. The average declared income of employees and pensioners is 15,215 euros (in 2011) compared to the average income of 5,771 euros for all other taxpayers.
Furthermore it was revealed that the state mechanism can only collect about 56.5% of direct taxes, with about 9 billion euros not collected. Taxes pay for 67.1% of public expenses, which is significantly less than the 82.4% Eurozone average. Direct taxes amount to 24.7% of all taxes, compared to the 29.2% Eurozone average, while indirect taxes amount to 36.9% (31.4% Eurozone average). The study finally shows that the average tax on labor is 31.3% in Greece, when it is 38.1% in the Eurozone.
