SEV says over-taxation threatens middle class in Greece

20 March 2016
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Greek households’ income (excluding benefits) totals 153.2 billion euros and the declared tax income of households is around 74 billion euros (with income tax revenue amounting to 8.7 billion euros or an 11.8 pct tax rate) – figures showing that tax evasion is thriving in the country – the Hellenic Federation of Enterprises (SEV) said in its weekly report on economic developments in the country.

SEV warned of the danger of the collapse of the middle class because of excessive taxation. “It is imperative to expand the tax base so that wage-earners in middle income brackets stop being excessively burdened, since this social class is essentially supporting the whole social structure and its collapse cannot been ignored,” the Federation said in the report, adding that it was important to take into account the repercussions of existing problems on dynamic enterprises creating highly paid jobs at a time when the government is examining additional burdens of wage workers.

“When the average citizen is discouraged in his effort to find a better job, it is the middle class that’s losing in the end. A consequent collapse of social cohesion leads to economic stalemate and gradually to political radicalism, further undermining the prosperity of the majority of citizens,” SEV said.

The report noted that higher taxes would lead either to a stronger black economy or to migration of other productive sections of the middle class and underlined the need for lower tax rates, reducing non-payroll costs, offering tax incentives for private investments and adopting a full use of electronic payments to combat tax evasion.

SEV said that currently four workers are paying taxes and contributions to cover the payment of three pensioners and the needs for public health services, education, justice, defense, etc. a model which apparently is not sustainable.

Referring to a tax rate currently discussed with the institutions, SEV said that a tax-free allowance was particularly high, not in size but compared with the poverty limit.

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