ATHENS, Feb. 5 (Xinhua) -- Post-bailout Greece needs a GDP boosting shock and the immediate reduction of the tax burden for households and businesses is the way forward, Greek experts suggest.
Greece exited last summer the eight-year bailouts, which were introduced to help afloat the debt-laden country.
Although the economy has returned to growth in recent years, many policy makers, financial analysts and business people argue that over taxation, among others, is undermining efforts to full recovery to pre-crisis levels soon.
According to the 2019 state budget, economic growth in 2019 is projected at 2.5 percent from 2.1 percent in 2018.
Unless economic growth is accelerated, Greek GDP will not return to the 2007 levels before 2040, according to a recent survey by the London-based IHS Markit financial information provider, Miranda Xafa, Greece's former representative at the International Monetary Fund, said on Monday during an event at the Foreign Press Association of Greece.
Xafa, a Professor of Economics, who is currently CEO of E.F. Consulting Ltd., an Athens-based advisory on euro area economic and financial issues, presented an alternative tax reform proposal she has prepared for Greece's Center for Liberal Studies (KEFiM) "Markos Dragoumis."
In a few words, KEFiM suggests the abolishment of part of property taxes introduced during the years of the crisis, the reduction of VAT rate to 20 percent from 24 percent and of income tax rates to a flat 20 percent for income from all sources from 22-55 percent, as well as the modernizing of tax audits.
Such policies, according to estimates, will help to boost Greek GDP growth by 2 percent in a two-year period, she explained.
Currently, 52 percent of Greeks fall below the taxable income and pay no income taxes, Xafa noted, while one in two taxpayers struggles to pay off arrears to the state, according to official data.
After Greece's exit from the bailout and as general elections due on this autumn is getting near, both the Left-led government and opposition parties have promised tax reductions to support employment and growth.
In Xafa's point of view, they are not bold enough. "No one is proposing a flat income tax or getting rid of the supplementary property taxes. We suggest going straight down to the 20 percent corporate tax rather than gradually reducing it as the government suggests," she said.
"We need a GDP boosting shock. We don't see any other way than reducing the tax load. We don't want to wait 20 years to get to where we were. We believe Greece would be far better off even with lower tax rates," Alexandros Skouras, KEFiM's president added.
He urged for a simpler steady taxation system with fewer loopholes, arguing that the black market is thriving due to high taxation rates.
The Greek state loses about 16 billion euros (18.2 billion U.S. dollars) annually, which accounted for about 9 percent of Greek GDP, in recent years from tax evasion, despite efforts made to combat the phenomenon after the start of the debt crisis, according to a 2017 study by Athens-based think tank DiaNeosis.
The KEFiM think tank suggests a comprehensive "Agenda for Freedom and Prosperity-Greece 2021" to move forward with no further delay.
Academics and experts are currently collaborating to create a road map for the implementation of necessary reforms that will enhance development in every aspect of Greek public life, from taxation and the labor market to education and public administration, Skouras explained. (1 euro= 1.14 U.S. dollars)
