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Economy

Struggling Greek Families Face High Taxes Amid Economic Growth

ATHENS – Greece’s commitment to assisting families grappling with soaring prices, particularly at supermarkets, has significantly fallen short of their needs. Their challenges are compounded by burdensome tax rates.

The government imposes higher income taxes on all household types compared to most countries globally, with Greek rates averaging approximately 10% higher than the OECD average, based in Paris.

Income taxes in Greece reach 22% for earnings up to €20,000 ($23,710) and escalate to 45% at €40,000 ($43,144), contrasting sharply with the advantageous rates offered to corporations and businesses. Meanwhile, lower and middle-income households shoulder the tax burden disproportionately.

Although the New Democracy government, now in its second term, has introduced bonuses for families with children in an effort to combat a severe population decline, the amounts provided are insufficient, and the incentives have largely proven ineffective.

In response, the government is reportedly reconsidering plans to provide income tax relief to families with children, aiming to alleviate financial strain and stimulate population growth. However, shipping oligarchs continue to enjoy significant tax exemptions, contributing little or nothing to the national coffers.

Despite Greece’s economy rebounding following the waning of the COVID-19 pandemic and recent increases in the minimum wage and salaries — the first since the onset of the 2010 international bailouts totaling €326 billion ($351.36 billion) — families have seen minimal benefits from the economic growth. Tax incentives primarily target international corporations, aimed at attracting foreign investment.

However, with the government indicating limited fiscal flexibility, particularly after substantial subsidies were provided for soaring electricity rates following Russia’s invasion of Ukraine, there is a risk that support allocated to families may be offset by cuts to other sectors.

The latest findings from the annual OECD survey on taxation reveal how Greek families bear a disproportionate tax burden. Unlike the wealthy, salaried workers have minimal avenues to shield their income, such as secret foreign bank accounts, notably in Switzerland.

For instance, a family with a net monthly income of €900 ($970.75) faces a tax rate of 34.5%, with housing expenses consuming a substantial portion unless they inherit a home. This rate exceeds the OECD average of 31.5%, and even with two children, Greek workers experience fewer deductions, resulting in a rate of 28.5%, considerably higher than the OECD average of 16.5%.

Consequently, Greece ranks among the top five OECD member states with the highest tax burden on households with children, markedly distinct from other Southern European nations.

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