Stournaras Advocates for Indexation of Tax Scale on Income

Analysts view the statements made by Bank of Greece Governor, Yannis Stournaras, in the monetary policy report as a significant signal supporting the indexation of the income tax scale. Specifically, Stournaras’ report highlights that ‘tax erosion is a critical issue for tax justice and sustainability, as it leads to increased tax burdens without corresponding improvement in taxpayers’ fiscal capacity.’ Furthermore, he emphasizes that ‘the tax policy implemented in Greece during 2019-23 successfully counteracted the effects of tax erosion, reducing real tax burdens while maintaining revenue stability and contributing more effectively to income inequality reduction compared to alternative indexing scenarios.’ The report concludes that quantifying tax erosion and incorporating it into medium-term fiscal strategies can enhance the accuracy of revenue forecasts and design more targeted policy interventions. Recent experience in Greece shows that enhancing the progressivity of tax policies can mitigate tax erosion, promoting fairer tax burden distribution and improving tax collection.