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Part II

Developments in the Member States

Greece

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Overall trends in taxation


Structure and development of tax revenues
Greece's total tax-to-GDP ratio (including social security contributions) amounted to 31 % in 2010, well below the
EU-27 average (35.6 %). This is among the lowest tax-to-GDP ratio for the countries in the euro area, where the
average value stands at 36.4 %.
Revenues from indirect taxes account for 12.3 percentage points of GDP, whereas social contributions supply
10.9% of GDP in terms of revenue. Although their contribution is lower than the EU-27 average which stands at
13.5 % of GDP, in Greece indirect taxes play a more important role than direct taxes. Revenue from direct taxes
expressed as a percentage of GDP is slightly above two thirds of the EU-27 average (7.8% as compared with
11.2 %). Revenues from personal income taxes in particular account for a mere 4.3 % of GDP, compared with an
EU-27 average of 7.7 % of GDP.
The vast majority of revenues, roughly 64 % of the total, flow to the central government while social security
funds receive almost all of the remainder. Local government levies only a limited share of overall taxation,
amounting to 0.8 % of GDP. While the share of the local government has remained fairly constant over time, the
fraction of the taxes destined to the central government has declined since 2000, with a corresponding increase in
receipts to the social security funds.
The overall tax burden increased rapidly from 1995 to 2000, when it reached a peak of 34.6 % of GDP (35.2 % if
adjusted for the cycle), reflecting the effort to combat tax evasion and to reduce the government deficit in the runup to the euro. The strongest relative increases in that period were recorded for corporate income and personal
income taxes. From 2002 to 2004, the cyclically adjusted tax burden dropped by almost four percentage points of
GDP with declines being recorded mostly for indirect taxes, employers social security contributions and corporate
taxes, following cuts in the rates. After reaching 31.3 % in 2005, it remained in the range of 29 percentage points
in the years before the crisis, and at its outbreak. In 2010, reflecting increased revenues from VAT and excises
duties, it stood at 30.6 % of GDP, up from 28.9 % in 2009.
Taxation of consumption, labour and capital; environmental taxation
In 2010 the implicit tax rate on consumption in Greece was 15.8 %, some 5.5 percentage points below the EU-27
average (21.3 %) and the second lowest value in the area after Spain. This is due to a relatively broad application
of reduced VAT rates as compared to the standard rate. The generalized increases in VAT rates and excises in the
course of 2010 have reversed the declining trend of the Greek ITR on consumption since 2007.
The implicit tax rate on labour is, at 31.3 %, roughly two percentage points below the EU-27 average. Given low
direct taxes, the influence of social security contributions on the overall developments of the indicator is
significant, and particularly relevant for the rise experienced in 2010. The ITR on labour, in the range of 34.5 % in
the period 2000-2003, was on a downward trend from 2007 to 2009.
Data on the ITR on capital are only available as of 2005, when the ITR on capital stood at 17.9 %. The ITR has
reached 18.8 % in 2008, remaining well below the EU-25 average of 23.3 %. The indicator has declined to 16.5 %
in 2010.
Reflecting increased taxes on energy products, including transportation fuel, environmental taxes have also
displayed an inverted trend in 2010 compared to the decline over previous years: their share of revenues in terms
of GDP decreased by a cumulative 0.5 percentage points from 2001 to 2009, reaching 2 %, while picking up to
2.4 % in 2010.

Taxation trends in the European Union

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