Taxing Ourselves to Death: Greece’s Tax Regulations

The high taxes are not by themselves a problem. They become a problem because of their very low reciprocity and the impact of uncertainty, itself often a result of poor institutional quality and governance inadequacy. High taxes should be reflected not only in corresponding social services, but also in the quality of government services, from licensing to the speed of justice. Rationalizing taxes will not suffice; well designed reforms in line with best practices have to advance at the same time. During the adjustment years Greece repeatedly chose to counter failing revenues with ever-increasing taxes that led in turn to an even faster collapse of the tax base and an inability to put the country on a path of structural transformation. Only recently, and partly as temporary measures taken because of the pandemic, this barrage of overtaxation has been rolled back, even though in many cases Greece remains a top taxer. As we anticipate the end of the pandemic, or at least the advent of tools to bring social and economic life to what used to be considered normal, the question remains if the structural reforms undertaken during the past years and the initiatives to rationalize the tax system advanced during the 2019–2020 period will suffice to bring about a rebound that is strong enough and manifests itself fast enough to overcome the legacy of two successive crises. This legacy is burdening today through debt both the private and the public sector, and in addition through the absence of jobs feeds from an economy that retains most of its pre-crisis attributes into society.