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Greek Budget Office Says Taxpayers Are 'Exhausted'

By Lorys Charalambous,, Cyprus

04 February 2014

Greece's Parliamentary Budget Office has warned that tax-raising capacity in the country is "exhausted," and that further increases will not bring in extra revenue.

The Office is headed by economics professor Panagiotis Liargovas, and was created as a condition of Greece's bailout by the European Union and the International Monetary Fund. Its assessment is presented in a quarterly report by five academics, which has been submitted by Liargovas to the Speaker of the Parliament.

The report also highlights tax evasion and increasing unemployment as reasons why the increased burden on tax payers is not reflected in an equivalent increase in tax revenue.

The authors note that taxes on salaries, pensions, and property have increased seven-fold since 2010, while liability for the self-employed will become nine times higher than in 2010 during 2014. The report also includes a bar chart showing that the top VAT and income tax rates are higher in Greece than the European Union average: the highest VAT rate is 23 percent, against a 21.52 percent EU average (20.45 in the Eurozone); the highest corporation tax bracket is 26 percent, against 21.84 percent (25.95 in the Eurozone); and the top income tax band is 46 percent, against 36.66 percent (44.52 percent in the Eurozone).

Further, extraordinary solidarity levies have increased the tax on income by between a further 1 and 4 percent for all income tax categories, and there have been increases in road and fuel taxes, including new taxes on electricity and natural gas and a tax increase on heating oil amounting to 450 percent.

The report also notes that prices during this period have remained high, reducing living standards, and that Greece's debt remains unsustainable. However, it judges that the fiscal situation has been stabilized, and notes that the country no longer has the largest deficit in the Eurozone.

TAGS: tax | property tax | International Monetary Fund (IMF) | corporation tax | tax rates | Greece | revenue statistics | individual income tax | European Union (EU) | Europe

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