With the statement “Behind the numbers lie choices,” the Alexis Tsipras Institute (INAT) responds to Akis Skertsos’s recent public remarks on tax policy.
“Any proposal concerning wages, pensions, the welfare state, or public services is immediately required to answer the question ‘where will the money come from?’ In contrast, when the discussion concerns tax rate cuts for high incomes, corporate profits, or distributed dividends, the same choice is presented almost as a matter of course as ‘development policy,’ he notes characteristically.
The full response from INAT
“Mr. Skertsos attempts to unfold an argument that frequently recurs in government discourse: that the increase in tax revenues in recent years is due to the reduction in tax rates implemented by the New Democracy government.
This is an old and familiar claim: that lowering tax rates can increase tax revenues, since it creates incentives to broaden the tax base—the so-called Laffer curve.
Mr. Skertsos regurgitates the same argument, without, of course, bothering to read the relevant studies that prove it almost never holds true in the real world—see, for example, the work of the ECB’s economists.
Invoking this logic, however, is not enough. Empirical evidence is needed. It must be demonstrated that, in this specific economy and during this specific period, the increase in revenue was indeed caused by the reduction in tax rates and not by other factors.
This is precisely what is missing from Mr. Skertsos’s reasoning.
He cites data on revenue from corporate taxation and dividends, that is, from the taxation of business profits and distributed earnings. This revenue has indeed increased. And it has increased because profitability rose, and with it, the tax base. So far, this observation is correct.
The problem begins when this observation leads to the conclusion that the increase in profitability is due to the reduction in tax rates. This is a logical leap. The temporal correlation between two phenomena does not automatically mean that one is the cause of the other. Correlation is not causation, as is often said in economic analysis. And here, the distinction is not a theoretical detail. It is the core of fiscal evidence.
Rising profits do not in themselves prove that tax cuts “worked.” It may be linked to inflationary price hikes, oligopolistic structures, widening profit margins, a squeeze on the wage share, or an increase in nominal consumption due to high prices rather than actual prosperity. And in the Greek case, these are not theoretical scenarios. They are aspects of economic reality experienced by households and have been highlighted, in various ways, by international and domestic economic organizations.
What does it matter that the IMF, the OECD, the ECB, the Bank of Greece, and the IOBE have spoken of greed-driven inflation and an unjustified increase in corporate profit margins at the expense of wages? Mr. Skertsos and the New Democracy government know better. It seems we are living in conditions of an economic miracle; it’s just that citizens refuse to believe it.
The crucial point, then, is not merely that revenues have increased. The crucial point is where these revenues came from and within what economic environment the profits that were taxed were generated.
When increased profitability is linked to inflation, rising profit margins, and the squeezing of real incomes, it cannot simply be presented as confirmation of a successful tax policy. Much less can it be used as an argument for even greater tax relief for capital.
Simply put: the government presents as an economic success a redistribution that, to a large extent, came at the expense of the social majority. It sees increased profits and calls for further tax breaks for capital. It sees stagnant wages and responds with allowances and vouchers. It sees inflation and incorporates it into the narrative of growth.
This is not a neutral economic analysis. It is a political choice.
On fiscal rules: The same logic emerges when the government invokes the European fiscal framework, attempting to present its own fiscal policy as the only way forward. However, European fiscal rules do not dictate the New Democracy party’s policy. They set a framework within which each government makes choices.
In the case of Greece, the current Medium-Term Program for 2025–2028 projects an average annual increase in net primary expenditure of 3.2%. This is the actual scope for fiscal policy. It is not the property of any government. It is not the technical prerogative of any government official. It is a binding framework within which public priorities must be prioritized.
The Mitsotakis government is currently exploiting this fiscal space to serve its own strategy: tax cuts for the highest incomes and large profits, piecemeal interventions for lower incomes, and managing inflation through temporary measures rather than permanent changes in the distribution of the burden.
A different government can and must utilize the same fiscal space to implement a different fiscal strategy.
This is the crux of the disagreement.
The country operates within a given European fiscal framework, with specific limits and commitments. So the crucial question is not whether one can distribute resources without restraint. One cannot. The crucial question is which priorities fit within this framework and which social interests are served by each choice.
Will the available margin be used to continue a model that systematically eases the burden on high incomes and high profits, while leaving labor, the middle class, and households to bear the brunt of rising costs?
Or will it be redirected, with seriousness and cost analysis, toward a progressive strategy that reduces the burden on labor, strengthens the welfare state, supports public investment, and taxes more fairly where wealth is actually concentrated?
This is the real political debate. Not whether fiscal rules exist. Rules exist and bind every government. The question is what choices you make within those rules.
New Democracy uses fiscal discipline as an excuse for social inaction and tax breaks for high-income earners.
A progressive government must demonstrate its own fiscal responsibility in practice: through priorities, cost-effectiveness, fair distribution of burdens, and genuine support for the social majority.
Because in the end, the question is not merely whether tax revenues have increased.
The question is who produced the wealth, who reaped the benefits, and who is being asked to foot the bill.”