Greece To Lower Personal Income Tax Threshold By 2020
How exactly do you solve a problem like Greece? Well, all I can say is, I’m glad I’m not the one who has to try! It does seem fairly obvious though that part of the problem is that Greece doesn’t collect enough tax.
Now, I’m all for low taxation of course. And I think raising rates of tax in Greece will, for the most part, be counterproductive. Because not only will this endanger the nascent economic recovery, but probably encourage yet more tax avoidance and evasion in a country that seems to have transformed tax dodging into an art form – the amount of tax evaded each year in Greece can be as much as 14 percent of gross domestic product, according to EY.
What seems to be the root of the problem is a narrow tax base and relatively high tax rates. If the burden was spread more evenly across the tax base, the Greek Government could possibly collect more revenue while lowering taxes to encourage growth. It’s a policy that the International Monetary Fund (IMF) for one is keen for Greece to implement, having called for such repeatedly in recent months. And while it’s not going to list Greece out of the crisis in a hurry, it would probably help.
That such measures haven’t been put in place yet, seven years after the crisis began, is surely a major failing of the bailout program. Indeed, under the agreement reached by Greece to secure further bailout funding, this important condition won’t begin to be met until 2020. Ancient Greece was famous for its theatrical tragedies, but this modern version has already turned into an epic.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look