CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Tax Reform Key to Greek Recovery, Says IMF

Tax Reform Key to Greek Recovery, Says IMF

by Ulrika Lomas,, Brussels

16 December 2016

Greece's failure to overhaul its tax regime is a key reason why it has struggled to emerge from its prolonged fiscal crisis, the International Monetary Fund (IMF) has said.

In a blog piece aimed at countering accusations that it is calling for more fiscal austerity in Greece in return for debt relief, the IMF said that tax reform, while difficult, would be considerably less painful than the deep cuts in public spending and investment that are "hampering growth and the delivery of basic public services."

"Greece still needs to reform the structure of its taxes and spending – how the government raises its money and what it spends it on – because both are highly unfriendly to growth and equity," the IMF said.

While noting that Greece has undertaken a huge fiscal adjustment, the IMF argued that it has done so without addressing to key problems, namely the tax and pensions systems.

According to the Fund, because of a generous tax allowance, around half of households are currently exempted from income tax. By comparison, on average, only eight percent of households are exempted from income tax in the eurozone.

What's more, an "extremely generous" pension system costs around 11 percent of gross domestic product annually to maintain, the Fund observed.

"Simply put, Greece cannot modernize its economy by boosting funding for infrastructure and well-targeted social programs while exempting more than half of households from income taxes and paying public pensions at the level of the richest European countries," the IMF said.

TAGS: tax | investment | pensions | Greece | services | Europe

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »