Taxes as Barriers to Sustainable Economic Prosperity: The Case of Greece

Abstract

This chapter aims to explore sustainable economic prosperity in Greece’s taxation system by answering how the increase in taxation affected people’s ability and willingness to pay taxes and if taxes act counter-cyclically or pro-cyclically. As the sustainable economic prosperity is a major priority of the European Union, taxes should influence positively production and growth as well as income distribution. To this extent, this chapter analyzes implicit tax rates (ITR) on labor and consumption. It also advances the analysis through the effective tax rate (ETR) on corporate investment in the European Union and Greece by focusing on effective marginal tax rate (EMTR) and effective average tax rate (EATR). Our multidimensional analysis reveals, among others, that the statutory corporate income tax rate of Greece is higher than the EU averages, while effective tax rates on capital investments appear to be high and dispersed. Consequently, Greece should reform its taxation system by lowering tax rates.