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The government’s belt-tightening has been drastic—and counterproductive, many economists argue. Tax rates are now higher than in most of the European Union, points out Miranda Xafa of the Centre for International Governance Innovation, and may be choking growth. The tax-free threshold is higher than the median private-sector wage, meaning revenues depend on a small share of taxpayers. The marginal rate for Greeks earning €40,000 ($46,500) or above (including social-security contributions) is around 70%. Ms. Xafa thinks that evasion may be rising, as self-employed people conceal their income. At its creditors’ insistence, the government will broaden the tax base in 2020.
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