Could the Greek Taxation Policy Pull the Economy from the Recession to Development?

Abstract

This paper examines the tax system of Greece from 2002 to 2016, the changes that have been made to it and the structure and evolution over time of taxes compared to GDP components and particularly to investments. Also, the impact of taxes on investments by category, is being studied. Examining the changes in taxes and investment in Greece for the 15year period, a negative relationship among them was found, as there was an increase in taxes and a reduction in investment. This is more profound in the period of the crisis 2010-2016, when taxation was increased (compared to pre-crisis years, 2002-2009) leading to an even greater reduction in investments in total economy. Considering the findings of our research, as well as those of previous studies, government and policy makers should realize that the reduction in the tax burden can bring an increase in investments by business and households, and that investments is the only route to drive the economy out of the recession.