OECD: Taxes swallow Greeks’ wages – 4 out of 10 euros go to taxes and contributions – Economic Post

The tax burden in Greece is above the average of OECD countries, as revealed by the OECD’s annual report, which shows that the government’s tax reduction rhetoric is suffering. The OECD figures published yesterday reflect the difficulties faced by workers in Greece, regarding income taxation and contributions, which burden them heavily. This concerns taxpayers whether they have a family or not, a fact that is directly related to the demographic problem in our country. High taxation is also one of the main reasons (the other is accuracy) of the continuous and ongoing overshooting of tax revenue targets, which has been happening from 2022 until now.

Based on the data, the worker without children pays high taxes and contributions, as the charges amount to 38.5%, compared to 34.8% which is the OECD average.

AADE: Hunting… for taxes of 60.76 billion euros in 2024

As the OECD report on taxation points out, in Greece the burden on families with children continues to be well above the OECD average at 37.5% compared to 29.5%, with Greece in 7th place in this ranking.

Charges

Beyond that, the average tax “wedge” (as the OECD calls the total burden) across all OECD countries for a couple with two children (one earns 100% of the median wage, the other earns 67% of that ) increased by 0.06 percentage points between 2022 and 2023 to 29.5%. For this type of household, the tax wedge increased in 21 countries and decreased in 17.

Also, the average OECD tax bracket for the one-income couple with two children rose by 0.08 percentage points between 2022 and 2023 to 25.7%.

The difference between the “tax wedge” for this type of household and that of a single worker earning the median wage increased by 0.04 percentage points to 9.1 percentage points between 2022 and 2023.

In Greece, charges increased by 0.73 percentage points and reached 37.1%.

The only decrease in the average tax wedge between 2022 and 2023 was seen for the single-parent family of two children earning 67% of the median wage.

Burdens for this type of household fell by 0.31 percentage points to 16.5% in 2023, showing an increase in 21 countries and a decrease in 17.

The largest reduction in the burden for this type of household (by 13.1 percentage points) occurred in the Slovak Republic and was due to a temporary increase in the child tax credit and an increase in child cash transfers.

In 2022, the tax wedge for this household type increased by 1.27 percentage points, the largest increase seen for any household type that year.

Employees without children

Regarding the unmarried worker who is paid the average wage, the burden of taxes and contributions, in all OECD countries in 2023 was 34.8%, marking an increase of 0.13 percentage points compared to 2022.

As the international Organization notes, this was the second consecutive year in which the tax wedge increased, after two years of decline during the COVID-19 pandemic in 2020 and 2021.

However, in Greece for the unmarried worker the specific burdens were at 38.4%, marking an increase of 0.44 percentage points.

According to OECD data the tax wedge increased in 23 of the 38 OECD countries between 2022 and 2023, decreased in 13 and remained the same in two.

The increase was more than one percentage point in Australia (2.14 percentage points), due to higher nominal wages and the removal of tax relief, and Luxembourg (1.39 percentage points), also due to higher nominal wages.

Reductions in the tax wedge for the single worker earning the median wage were less than one percentage point, ranging from -0.01 percentage points in Canada to -0.98 percentage points in Mexico.

The problem of accuracy

In most countries, the increase in labor taxation is mainly due to increases in personal income tax. While real wages fell in 18 OECD countries, nominal wages rose in 37 of 38 OECD countries as inflation remained above historical levels. In the absence of automatic indexation of tax systems in many OECD countries, high inflation tends to increase workers’ tax liabilities, pushing them into higher tax brackets, and erodes the value of the tax breaks and cash benefits they receive, which in Greece, with the Greek government allowing the phenomenon to develop to the detriment of the workers, without taking substantial measures.