Is it realistic to expect the Greek economy to recover?

When, out of every 10 euros of profit, approximately 6 euros are paid for various taxes and duties in Greece, how realistic is it to expect the Greek economy to recover – and soon?

While the nominal tax rate is 39%, the actual tax rate, when the various taxes and duties are added, comes to a staggering 57.5%. The ENFIA (Single Property Tax), the EFK (Excise Duty), Municipal taxes and duties, contributions to ERT (the Hellenic Broadcasting Corporation) and APE (Renewable Energy Sources), as well as advertising duty, etc. are just some of the charges that reduce the already almost non-existent competitiveness of Greek enterprises on a daily basis.

Finally – and this has become self-evident – excessive taxation greatly reduces the State’s ability to collect. This results in failure to meet the terms of the loan contracts concluded by our country, thus hitting not only the private economy, but also the functioning of the State itself. Moreover, any partial suspension of the functioning of the State machinery adversely affects all economic activity.

Under these conditions, how can domestic enterprises face the challenges of the international business environment? How will they compete on foreign markets? How will they carry out investments to modernise their facilities and increase productivity?

At the end of the day, all these excessive taxes and pointless duties offer nothing in return. On the contrary… their only effect is to radically increase the operating cost of domestic enterprises.

We truly wonder if anyone has realised that the enterprises that have survived have done so under conditions of credit squeeze. The capital controls have brought the domestic productive base to a standstill, particularly producers situated in rural areas, who are the most vulnerable to competition than similar enterprises located in neighbouring countries.

Thus, instead of a government-fostered business environment being in a position to boost competitiveness, it is constantly diminishing it, by burdening our enterprises with a competitive disadvantage, which it exacerbates on a daily basis.

The Greek economy cannot recover without the support of the private sector of the economy and, more specifically, without a productive base.

The combination of the ongoing recession, the continued conditions of credit suffocation and the uncertainty concerning the future of the Greek economy, (as a result of negotiations on the completion of its assessment), have all led to the further weakening of private enterprises.

Reduced taxation, relaxation of capital controls and acceleration of reforms can halt the recession and alleviate the daily overburdening of enterprises.

The nation’s economy cannot simply continue to weather recession policies. The mixture of economic policies applied must lead to the recovery required for the creation of new jobs and the improvement in social cohesion.

The further into the future the recovery is postponed, the more the uncertainty concerning this ‘future’ will grow and the greater the distance to the goal of recovery.

Therefore, is the ‘hunt’ for a budget surplus productive? Does over-taxation lead to development? The answers are obvious, and, as a result, we are living in an economic environment that has reached a dead end.

Yet again, we maintain that the salvation of the banks and the State cannot come at the cost of thousands of enterprises and jobs…