Greek Families Dogged by High Taxation



High taxes coupled with low wages make cost-of-living expenses difficult to manage in Greece.

Greece ranks about half way in tax rates among the 35 countries of the OECD, a new report showed on Thursday.

Although OECD workers on average paid over 25 percent of their salaries in taxes, in Greece an unmarried employee with no children faced a tax wedge of 40.8 percent last year, compared to an average of 35.9 percent.

The OECD defines a tax wedge as the amount of taxes paid by an average single worker  without children and the corresponding total labor cost for the employer.

Thursday’s report — Taxing Wages 2018 — saw increases in the personal tax rate across all OECD states on average from 2017.

In Greece, the tax wedge for the average single worker increased by two percentage points from 38.8 percent to 40.8 percent over the last 17 years.

During that same period, the OECD report claims, the average tax wedge across the OECD decreased by 1.1 percentage point from 37.0 percent to 35.9 percent.

 

 

An unmarried Greek worker last year faced an average tax rate of 26 percent, 0.5 percent higher than the OECD average; this translates to take-home pay of 74 percent of a gross wage, compared to 74.5 percent across the OECD.

However, for married workers, although taxes fell to 23.5 percent in 2017, this still puts Greece fifth highest in the OECD where the average tax rate is 14 percent. Take-home pay for married workers after deductions, benefits and other provisions was 76.3 percent — well below the 86 percent OECD average.

Thursday’s findings follow earlier OECD research which showed Greek families were struggling under Nordic levels of taxation.

Its March 2018 Going for Growth report had sobering news for Greek economists and policymakers alike.

It found that although Greece was among the countries which had undertaken reforms to “strengthen social protection”, public investment had fallen, then yo-yoed before reaching just 3.6 percent of GDP.

Families with two children “earning the average worker earnings” were paying over 38 percent tax in 2016, putting Greece among the highest tax rates in the EU.