Who Bears the Tax Burden in Greece?

In Greece, the majority of taxable income for individuals comes from salaried services and pensions, accounting for almost 70% in 2023, according to a Eurobank study. Business activity follows at a significant distance, contributing 9%.

The Eurobank study, titled 'Inflation and the Tax Burden on Households,' highlights the strong progression in the tax scale for salaried employees, where higher rates are applied as incomes increase.

'Bracket creep,' a side effect of progressive systems, exacerbates the tax burden, especially during periods of high inflation, if the tax scale is not adjusted for inflation.

Eurobank examined three scenarios for indexing the tax scale and found that non-indexation significantly contributed to the increase in tax revenues.

Using data from the Independent Authority for Public Revenue (ΑΑΔΕ), Eurobank calculated that the tax burden increased from 9.9% in 2021 to 11.1% in 2023, with 37% of this increase due to non-indexation.

The study concludes that non-indexation primarily affects the middle and upper-middle income strata of salaried employees.

Comparing Greece with other countries in Southern Europe, the tax burden for a single salaried employee is average, while it worsens for married couples with children due to smaller benefits.

Eurobank suggests establishing an automatic mechanism for inflation-adjusting the limits of the tax brackets or a targeted indexation of specific elements of the tax scale.