Greece’s political turmoil and economic uncertainty makes businesses feel precarious about their situation. Businesses want that feeling of security when taking risks or progressing to their next step. However, things have been made even more difficult now. In a new wave of recent taxes, the government has increased taxes for small and medium-sized enterprises (SMEs) to 29%.
The Greek economy is in need of an innovative and a fresh approach to business and economics. It needs a grass roots approach. And in order to allow this to happen there has to be an environment that is hospitable and allows for growth. With such a heavy tax for startups, it disincentivises potential entrepreneurs.
According to an OECD survey, Greece is among the highest countries in the EU for its taxes on small and medium-sized enterprises (SMEs). It stands at 29 percent, only beaten by Germany’s 29.8%. Many critics condemn this ‘one-size-fits-all’ taxation. Naturally Tspiras is trying to balance the books with the European creditors. However, in doing so he is crippling small business and suffocating the entrepreneurial spirit of Greece.
The Luck of the Irish?
Ireland, like Greece, was hit hard by the financial crisis, and has struggled through austerity. However, they have experienced remarkable growth in the past few years, and many say it is because of its SMEs. The company tax for SMEs is at one of the lowest rates in Europe (12.5%), and as extra bonus new startups and businesses do not get taxed for their first three years (unless they are making over €40,000). We can also see through the figures that SMEs have been the driving force behind Ireland’s economic growth: 99.7% of active enterprises in Ireland are SMEs, and they account for over 50% of employment; and since the 2008 financial crash, small businesses have increased by 3,000.
The different climates established by taxation in both Greece and Ireland has put them a world apart. If Greece wants to create an entrepreneurial culture, incentivise educated people to stay, and heal some of its social and economic problems, then it surely must address the problems that SMEs face.