Indirect taxes are surging in Greece, with VAT collections leading the charge due to high prices, followed by Specific Consumption Taxes (Excise Duties - EFK). According to the new OECD report, our country is in the top five member states with the highest rates of indirect taxation, as the corresponding revenue reached 40.1% of the total in 2023, significantly higher than the Organization's average of 31.2%.
The high rates in VAT and Excise Duties boost public revenues but simultaneously sustain high prices and disproportionately burden household budgets, mostly affecting the financially weaker strata. In 2024, total tax revenue amounted to 39.8% of GDP, up from 38.9% in 2023, remaining higher than the OECD average of 34.1%. Greece now ranks 10th in terms of tax revenue as a percentage of GDP, while social security contributions are also at high levels compared to the other countries of the Organization, significantly burdening the cost of labor.
According to OECD data for our country:
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Greece has a very high reliance on VAT and special taxes. It draws about 40.7% of its total tax revenue from consumption taxes:
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22.5% from VAT
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18.2% from specific consumption taxes (fuels, tobacco, etc.)
The OECD country average is 31.3%, with Greece ranking 5th globally in terms of reliance on indirect taxation.
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Social security contributions are among the highest in Europe. Social security contributions in Greece account for 28.8% of total tax revenue, while the OECD average is 25.5%.
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Income tax is lower than the average, as it accounts for 15.5% of total revenue, which indicates that Greece does not rely as much on direct income tax as other developed countries. The OECD average is 23.7%. Indicatively, in Denmark, the rate reaches 57.2%, and in Sweden, 26.9%.
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Greece, relative to the size of its economy, shows total tax revenue above 38% of GDP, surpassing countries like Germany (38.%), Spain (36.7%), and the United Kingdom (34.4%).
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A great dependence of revenue on salaried employees and pensioners is observed. The OECD points out that income tax revenue in Greece mainly comes from salaried employees and pensioners, while revenue from freelancers and self-employed individuals is proportionally lower compared to other countries.
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Greece has historically recorded one of the largest increases in tax revenue. Between 2010 and 2024, the tax-to-GDP ratio increased by 7.4 percentage points, ranking the country 3rd among OECD member states, after Slovakia and Japan.
Marios Christodoulou
www.bankingnews.gr
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