The official Greece economic growth rate is currently at 6.5%. This means that for the period of 2021 till 2021, Greece' gross domestic product (GDP) will increase at an average of annual rates. This means that the country's gross domestic product (GDP) has been growing steadily since the start of the global economic recession in 2021. The main contributing factors for this are: stable and investor-friendly Athens market, low and consistently decreasing unemployment rate, favorable external and internal conditions and good fiscal management policies.
However, there have been times when the government has failed to deliver on promises made to its citizens. As a result, there are widespread concerns on the effects of the economic turmoil on the Greek economy. There have been times when the Greek government was compelled to postpone or cancel policy initiatives due to a lack of resources. Some measures implemented by the government include: tax hike, VAT hike, recapitalization of banks and printing of new currency.
Increase in Excise Tax: The government has been implementing a series of tax hikes in order to raise funds for various projects. These include: basic customs duty, property tax, Value Added Tax (VAT), sales tax, Import, Emigration and Employment Office (OEI) tax, Unemployed Provident Fund (UPF) tax and Structural Tax. In addition to these, several new indirect taxes have been introduced by the government.
Tightening of Credit Market: Since it is a major contributor to the Greek economic growth, the credit market in Greece has been affected by several credit card bailout packages being implemented by the European Union (EU). The introduction of capital controls has left lenders with little choice but raise interest rates and reduce provisions. In addition to this, the measures introduced by the European Union to limit the credit has been applied not only to Greece but also to other countries including Portugal, Ireland, Cyprus and Spain.
Economic growth in Greece has depended on tax revenue. However, in the past few years, following the introduction of the euro as legal tender, the government has had to implement additional tax measures to combat excessive tax evasion by business and individuals. In particular, the changes in the corporate tax regime and the introduction of a personal income tax rate of 32 percent on Greek individuals have been used by many businessmen to save or minimize the amounts they pay in taxes. Such practices have led to a significant decline in the country's gross domestic product (GDP).
Simultaneously, there has been an increase in the number of tax evasions and fraud cases. According to estimates, the price of tax evasion and fraud is more than six billion Euros. Additionally, the growing cases of tax . . . . . . avoidance are straining the already strained relationship between Greece's law enforcement agencies and the public. Greece's public prosecutor has repeatedly appealed to the European Union to strengthen its laws against tax evasion and avoidance.
The European Union and the European Central Bank (ECB) are concerned at the worsening state of the Greek economy. The Greek government has requested bailout funds from both the EU. The bailout money was supposed to be used for debt repayment. Although this request was approved recently, it will take time before Greece receives the funds.
As a result of these difficulties, the government is trying hard to boost the economy by implementing fiscal policy measures that will reduce the burden of tax payments and increase the country's ability to generate revenue. These efforts are being supported by the European Central Bank (ECB). However, the bailout money may not fully resolve the problems of Greece's debt burden. The ongoing threat of bankruptcy is also threatening the sustainability of the Greek fiscal policy and the sustainability of the overall debt structure.