Question

How do you suppose the higher taxes have affected the incentive for Greek residents to engage in tax avoidance, or legally reduce tax liabilities, including earning less income that is subjected to taxation?

Short answer

It has increased subsequently.

Step-by-step solution

Step 1. Given Information.

The Greek government has increased tax rates.

The objective is to find out how has it impacted tax avoidance.

Step 2. The reason.

The increase in tax rates has led to the increase in tax avoidance or finding less income subjected to taxation because the greater tax means fewer savings though the income remains the same. So people do not want to decrease their savings and would rather avoid paying their taxes.