Probably most of you have heard about the 'terrible tax system in Greece'. The stories about Greeks being strangled by it. And probably you think the same as I did. "Well: then you should have paid your taxes all those years before. Welcome to the tax-world! Of course taxes seem high if you never paid them before."
But are they really that high? I am Dutch and in the Netherlands we pay income tax. We aren't the highest in the world but definitely not the lowest as well. So I always think: your taxes are high? Compared to what? Because if you would compare the income tax to the Netherlands, it is even lower. So what are you complaining about?
In the past 1,5 year we have lived in Greece for almost 12 months. I have heard all the stories around me about the taxes and I have talked to different people. Just so you know, these stories are from the mainland, NOT from the islands. Most of the people I spoke to have always paid their taxes. Before and after the crisis. Which made me wonder: who is it that didn't pay their taxes all those years? Probably the answer is the very rich and the multinationals. The system is unfortunately still corrupt and has been for many years. So those who have money, can bribe. Or maybe it isn't that people didn't pay their taxes, it is just that all the tax money has gone to other pockets than it should have gone.
Incomes are cut in half but the monthly bills are the same
I see that my family in law is struggling to pay for the taxes due to the cut backs in salary. Yes, since the crisis incomes are cut in half. For example: you are a teacher in high school. You used to earn €1.800 per month. When the crisis started, this salary was suddenly cut in half. Yes: IN HALF. Good luck with that... The average salary is nowadays €750-€1.200 per month. Including a Master degree. And it isn't the case that prices in Greece are lower than in the Netherlands. The supermarket has the same, sometimes even higher prices. The costs for diesel, gasoline, electricity, internet and phone are the same. The only thing that is cheaper here, is real estate. You can rent an appartement in the city of Ioannina for around €350-€500. Compared to Amsterdam, that is 1/3 of the rent. But seriously, that is the only thing! All the rest of your monthly bills are the same or even higher. Take for example the road taxes. For a Jeep on gasoline you have to pay over €2.000,- road taxes. Even in the Netherlands this isn't the case and there we have a lot more and better roads. Luckily they have normal rates for cars on LPG so everybody builds in a gastank nowadays. And when you walk through the streets in the winter, you will find cities covered in smoke from all the chimneys. The Greeks use mostly their fireplace and wood stoves to heat up their house because other solutions are too expensive.
We digged into the tax system Recently Dimitris got a job offer from a company here in Greece. It started out as a promising job. So when they where about to make him the offer, we did some digging into the Greek tax system. In the end you want to know how much you have netto right? Oké, the tax system is a maze and not really transparent. That is why I called with an experienced Greek accountant to get the details. This is what I found out what you have to pay:
Income tax This tax is according to a similar system as the Netherlands: - 22% over the first €25.000 - 32% over €25.001 - €42.000 - 42% over 42.001 and above In the Netherlands it starts with 36,55% so this doesn't look that bad right?
Unemployment benefit For unemployment benefit you have to pay 2-6% per year. Still acceptable in my opinion.
€650,- per year because you have a job Yes this one got my brain starting to crack a little bit. You have to pay a set amount of €650,- per year BECAUSE YOU HAVE A JOB. I asked the accountant: "Why? You already pay income tax right?" The answer was: "There is no WHY in Greece..."
But here comes the big one: 27% for health insurance and pension funds Wauw. You have to pay 27% for health insurance and your pension. This isn't a choice! You have to pay this, even if you don't want these things.
After figuring this out and summing it all up, we came to a total of 57% that Dimitris has to pay for taxes, if he starts working in Greece. That is a lot of money... But I found out this isn't all yet. Yes I kept the best for last ;)
You have to pay your taxes upfront
In Greece people have to pay their taxes upfront. That means you pay now the taxes for the next year. But how does it work when you start working? Well they have a very very (not so) clever solution for this. After the first year you declare your income etc and they calculate how much taxes you have to pay for that year. Not to weird and you just have to save them up during the year. But here it comes: after this first year, they make a calculation for the next year as well and those you have to pay upfront. Conclusion: after your first year you have to pay the taxes of this AND the next year. So where do you live from the first year, if all your income goes to taxes? How do graduated students start to work? Where do they pay their monthly bills from? Is it just me or does this seem impossible?
I guess it explains at least why so many people still live with their parents, either leave the country or try to avoid paying these taxes. Wouldn't you do the same?
At least we decided not to stay in Greece. We are very lucky that we have this choice and we can leave. And I have to admit: you will no longer hear me say that the Greeks are wrong to complain...