EU Economy
Greeks pay a lot of tax
By Michael Hennigan, Finfacts founder and editor
Mar 26, 2015 - 7:26 AM

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Greece has a lot of economic problems, but being under-taxed is not one of them. In 2013, the latest year for which comparable data is available, actual government budget revenue in Greece was equivalent to 47% of GDP, the 12th highest level in the world, against 44% in Germany.

Simon Baptist, chief economist and Asia regional director, says thiws means that taxes make up a bigger share of the Greek economy than they do the German one. "That's not to say that the Greek tax system is efficient, or that there isn't tax evasion, but the idea that one of Greece's core problems is that the government doesn't raise enough tax is just not right.

In fact, there doesn't appear to be a big correlation between the amount of revenue a government collects and whether it was embroiled in Europe's sovereign debt crisis. High-tax Italy and Greece were affected, as were relatively low tax Spain and Ireland. I don't have an ideological position on the size of the state. Raising tax revenue has costs and benefits, depending on how the revenue is raised, and what use it is put to. Raising money through a carbon tax to fund education, for example, is better than using income tax to fund farm subsidies.

How much Greece raises is important, but it also matters to what use it is put."

Eurostat: Government finance statistics

Ratios are higher than measures of the tax burden as revenues from non-tax sources are also included e.g. central bank dividends.

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