Tax hubris or tax populism?

Since his return from the United States, Stefanos Kasselakis, the new leader of SYRIZA, has aimed to project a more distinct and serious image compared to that immediately following his election, which had been consistently highlighted on morning television programs. He distanced his partner and dog from the limelight and instead engaged in institutional meetings and advocated for policy positions on various issues.

In response to the government’s recent tax measures for self-employed professionals, Kasselakis accused the New Democracy administration of tax hubris, allegedly a result of their landslide victory in the legislative elections. Furthermore, he made a commitment that if SYRIZA returns to power, they will eliminate taxes for professionals declaring an income of up to 10,000 euros per year. “Not as a favor to you, but because if your income is at that level, it is a social necessity that the tax you pay should be reduced to zero,” he asserted.

This stance is overtly populist and appears aimed at gaining the favor of numerous tax evaders. As is well known, 70% of the 735,000 self-employed professionals declare earnings of less than 10,000 euros per year. (For instance, taxi drivers report an average income of 3,726 euros per year, hairdressers 3,439 euros, car repair shops 6,017 euros, and bars 6,860 euros.)

In essence, nearly half a million professionals appear to earn less on average than a salaried worker receiving the minimum wage of 780 euros per year. As a result, they are required to pay a ridiculously small tax averaging just 867 euros annually (comprising a 217-euro primary tax and a lump sum tax of 650 euros). This tax is considerably lower than what the average salaried employee pays (1,160 euros) and only slightly higher than what an average retiree contributes (847 euros annually).

Thankfully, in contrast to Kasselakis’ populist rhetoric, the government is now taking some basic steps to combat tax evasion among professionals, who are commonly seen as a “privileged clientele” by the New Democracy party. The Finance Ministry’s objective is for professionals to pay an additional tax of 600 million euros annually. Considering that tax evasion within this specific economic group is estimated at 10 billion euros per year, there is still much progress to be made. Nevertheless, it marks a promising beginning.