Greece the Only OECD Country to Raise VAT in 2016

Greece is the exception to the general trend that has prevailed in recent years among OECD member countries, to reduce the tax burden on businesses and individuals, in order to stimulate economic growth and enhance competitiveness.

In a report titled Tax Policy Reforms: OECD and Selected Partner Economies that was released on Wednesday, the OECD notes that Greece is a special case, as it increases taxes and insurance contributions to achieve its financial objectives, inevitably resulting in the deterioration of its competitiveness.

After the initial phase of the global crisis, when the trend towards higher tax rates and revenue-lowering spending prevailed, most OECD countries turned to fiscal reforms aimed at growth, the report says.

All of the countries except Greece, have opted for tax cuts in both insurance contributions and business profits.

And while many countries have refrained from increasing VAT to boost consumption, in 2016 Greece was the only country to increase VAT, the report notes.

“Apart from Greece which raised its standard VAT rate, there were no changes to standard VAT rates in 2016, suggesting that the willingness of countries to raise additional revenues through increases in the standard VAT rate has diminished”, OECD says.