Greece: Taxes Eat Up Income

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From 2020 to the end of 2023, gross earnings (gross) increased by 11%, and the income tax corresponding to these earnings increased by 41%.

The long-awaited abolition of the so-called “solidarity contribution” and the reduction of social security fees – measures promised and implemented by the ruling conservative government that were presented as a real concern for wage workers who had been bled dry by the previous left-wing SYRIZA government – were cancelled and then reversed by this increase in income tax.

Promise “New Democracy” on bringing wages closer to the average level EU remained unfulfilled, and rising inflation on goods and some services widened the gap. According to the Organisation for Economic Co-operation and Development (OECD), gross annual earnings averaged 12,554 euros, falling over the course of a decade due to the financial crisis. Income tax on these earnings averaged 946 euros, including solidarity contributions. Social security costs added another 2,443 euros.

The conservative government that came to power in 2019 quickly decided to raise the minimum wage, something it had last done before the crisis, during which it was significantly reduced. These increases – in fact, there have been many – have helped to increase gross income, which by the end of 2023 reached €17,685, up 10.93% from 2020.

But despite the abolition of the solidarity contribution, the average income tax was 1,334 euros, up 41.01% compared to 2020. Social security contributions remained almost unchanged at 2,452 euros, up 0.37%.

Due to some changes in the tax code, the expected 3% revenue growth will be exceeded by a 7.5% increase in income taxes, and disposable income will grow 2.5 percentage points below inflation.

Since the current government took office in 2019, it has not updated the tax brackets to take inflation into account. This would not have been a major problem in previous years, when inflation was negative due to the crisis and then rose to very low levels.

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