The average single worker in Greece faced a tax wedge of 40.2 per cent in 2016, according to the Organization for Economic Cooperation and Development (OECD) report ‘Taxing Wages 2017’.
The term ‘tax wedge’ refers to the difference between before-tax and after-tax wages, including the tax paid by both the employee and the employer and Greece ranks 14th among the organisation’s 34 countries, marking an increase of 1.06 per cent since 2015. The OECD tax wedge average stands at 36 per cent and many countries provide benefits to families with children. In Greece, income tax and employer social security contributions account for 69 per cent of the total tax wedge, while the average OECD stands at 77 per cent.
According to the annual report, the increased tax burden in Greece was due to hikes in income tax and social security contributions of workers and employers.
A family with two children and one working parent in Greece takes home 77 per cent of the nominal salary compared to the OECD average of 85.7 per cent.
But the greatest burden comes from social security contributions which are about 50 per cent higher that the average OECD rate, for both workers and employers. More specifically, the employer pays 19.9 per cent of a worker’s salary for social security – compared to 14.4 per cent in the OECD. The workers pay 12.6 per cent of their salary, compared to the OECD average of 8.2 per cent.