ATHENS – An avalanche of new taxes and hikes imposed by Prime Minister Alexis Tsipras – who promised to cut them – has devoured the earnings of companies who pay 58 percent in taxes to the state at the same time he’s trying to lure foreign investors.
The ruling Radical Left SYRIZA leader said attracting companies is a linchpin of his hopes for an economic recovery even though even more radical elements in the party don’t want them and want to block foreign investors.
With major opposition New Democracy leader Kyriakos Mitsotakis promising to cut taxes if elected – he has double-digit leads in polls with Tsipras reneging on anti-austerity promises – the Premier has reached out to foreign businesses, particularly in China where enterprises are scooping up Greek assets after he also reneged on anti-privatization pledges.
A survey by the Chicago-based Grant Thornton company that specializes in tax and audit analyses showed that almost six in every 10 euros earned by Greek companies went out the door in taxes, leaving little for re-investment, hiring or research and development.
The poll showed that Greece’s high taxation is damaging the most dynamic part of the economy, as just 10 percent of the country’s enterprises pay 84 percent of all corporate taxation, Kathimerini said in a review.
The burden has prevented and slowed investments at the same time Tsipras said he’s bringing recovery from a crushing economic crisis even though his Administration, which includes the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) raised the corporate tax rate to 29 percent and hiked the Value Added Tax (VAT) among other increases put on companies.
In 2016, a year after Tsipras came to power, the assets of the companies monitored grew by just 1.3 percent, while sales expanded 2 percent and pretax earnings increased 63 percent.
Across the economy one in every two enterprises is suffering from low growth and high borrowing.
The funding needs of 4,000 companies are estimated at 16 billion euros ($19.83 billion), while 1,520 companies – 19 percent of the sample – said they have, despite the crisis and taxes, been able to expand and seen their books okay and are able to borrow.