OECD report points to heavy tax burden on Greek salary workers

By Costas Karkayiannis

Greece had one of the highest tax burdens on labor income last year, ranking 11th among the 34 member states of the Organization for Economic Cooperation and Development, according to an OECD report published on Friday.

The total tax faced by the average Greek worker in 2013 amounted to 41.6 percent of the labor cost, against an OECD average of 35.9 percent.

The spread between the social security contributions that Greeks pay and that of their OECD counterparts remains huge, as the average worker in Greece must pay 34.4 percent of their labor income to their social security fund, against an OECD average of 22.5 percent. When considering what Greeks get in return, the figure seems exorbitant.

Greece has reduced the total taxation of labor by 1.35 percent of the total labor cost (i.e. salary plus social security contributions) over the last year, but compared with 2010 the total tax burden on Greek salary workers has grown by 1.5 percent of the total labor cost. This was in line with the majority of OECD member states, which reduced their tax exemptions and tax-free incomes, the annual OECD report on salaried labor taxation for 2013 showed.

The tax burden on the average single salary worker in Greece grew by 0.3 percent between 2009 and 2013 to reach 41.6 percent of the total salary cost, and by 2.5 percent from 2000 to 2013. Salary workers with two children saw their average tax burden rise by 2.9 percent from 2009 to 2013, against an OECD average rise of 1.4 percentage points.

One fact that suggests Greece might want to rethink its tax policy is that salary workers with two children pay 44.5 percent of their income in taxes – the highest rate among the OECD member states.