As Greece prepares for the Thessaloniki International Fair, the government is keen to stress that since 2019 not a single tax rate has been increased. This claim is accurate, but it omits a crucial detail: inflation has quietly swelled public revenues, particularly through indirect taxation such as value-added tax (VAT). Over the past four years, inflation in Greece has averaged 4.5 percent, pushing households to pay more for the same goods and services, and in turn lifting VAT receipts to unprecedented levels. Today, VAT revenues in Greece account for about 11 percent of GDP, far above the European Union average of 7.5 percent.
Government spokesman Pavlos Marinakis has attributed the rise in tax revenues to falling unemployment, stronger economic growth and the state’s crackdown on tax evasion. These factors are certainly at play, but official data leave little doubt that inflation has been decisive. The surge in prices has reshaped consumption: not necessarily in volume, but in value. As nearly every category of goods and services became more expensive, households found themselves footing higher bills, automatically boosting VAT collections. It is a phenomenon seen in every high-inflation economy, where indirect taxation tracks price increases and swells state coffers, regardless of any improvement - or lack thereof - in citizens’ real disposable income.
The trend of recent years illustrates this dynamic clearly. In 2021, with inflation still subdued, VAT revenues amounted to €17.4 billion, representing 9.4 percent of GDP. The following year, as the energy crisis and rising raw material costs drove prices sharply higher, revenues jumped to €21.4 billion, or 10.3 percent of GDP. In 2023, they climbed further to €23.4 billion, equivalent to 10.4 percent of GDP. By 2024, with inflation persisting, VAT receipts reached €26.3 billion, lifting the share to 11.1 percent of GDP. Projections for 2025 put revenues at €27.3 billion, with the ratio expected to remain close to 11 percent.
The picture that emerges is one in which the increase in fiscal revenues is not merely the product of reforms or improved compliance, as the government prefers to suggest, but largely a result of higher prices. While officials avoid highlighting the role of inflation, the reality is that Greece’s public coffers have been filled primarily because households are paying more for the same everyday goods and services.
