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The Relationship between Taxation Levels and Economic Growth in Greece: Comparison with Selected Countries

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  • Zoumpoulidis Vassilios

Abstract

Purpose: The purpose of this paper is to examine the effect of taxation levels on the economic growth of Greece over a period and compare the results with other European countries. A theoretical model connecting taxation rates, revenue and economic growth is difficult to apply because of the multitude of legislation acts, regulations, exemptions, and reforms regarding taxation. Design and Methodology: In the paper the percentage of direct, indirect, and environmental taxes to GDP, as well as the implicit taxation rates for consumption and labor are examined as to how they affect the GDP and GDP per capita growth rate for Greece, Germany, Italy, and Portugal over the period from 1995 to 2018. Findings: The results show that any increase or decrease in these taxation figures has a different effect on the economies of these countries because of the inherent differences in each economic environment. Practical implications: The common conception that high tax rates have a negative effect on the economy seems to apply only for the steady and growing German economy. For the Greek and the Portuguese economies, depression, external debt and changes in legislation and reforms add more factors that influence the economic growth and sometimes reverse the result. Originality/Value: While many studies have investigated the effect of taxation rates on the economic growth, the originality of this paper lies in the fact that it deals with the same subject specifically for Greece and compares the results with other European Union countries.

Suggested Citation

  • Zoumpoulidis Vassilios, 2021. "The Relationship between Taxation Levels and Economic Growth in Greece: Comparison with Selected Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 321-343.
    • Handle: RePEc:ers:ijebaa:v:ix:y:2021:i:2:p:321-343
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    References listed on IDEAS

    as
    1. Congressional Budget Office, 2014. "How CBO Analyzes the Effects of Changes in Federal Fiscal Policies on the Economy," Reports 49494, Congressional Budget Office.
    2. Mark Hallerberg, 2012. "Explaining European Patterns of Taxation: From the Introduction of the Euro to the Euro-Crisis," Research Department Publications 4777, Inter-American Development Bank, Research Department.
    3. repec:idb:brikps:70578 is not listed on IDEAS
    4. Soldatos Gerasimos T., 2016. "The Laffer Curve, Efficiency, and Tax Policy: A Note," Review of Economics, De Gruyter, vol. 67(3), pages 255-262, December.
    5. Congressional Budget Office, 2014. "How CBO Analyzes the Effects of Changes in Federal Fiscal Policies on the Economy," Reports 49494, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Taxation; Indirect tax; Direct tax; Environmental tax; Implicit tax rate; Labor tax rate; Consumption tax rate; Gross Domestic Product (GDP); Gross Domestic Product (GDP) per Capita; Value Added Tax (VAT); Laffer curve.;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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