Emphasis will be placed on the relief of middle incomes and specifically from 20,000 to 50,000 euros who were the losers of the changes made by the government immediately after its election in 2019
The reform of the two tax scales with which the incomes derived from salaries and pensions as well as the incomes from rents are taxed is planned by the ruling party for the next four years.
According to a report by Kathimerini, emphasis will be placed on easing middle incomes, specifically from 20,000 to 50,000 euros, which were also the losers of the changes made by the government immediately after its election in 2019, while a solution is also being sought for the way incomes are taxed coming from liberal professions and the self-employed.
This category of taxpayers was also the most profitable of the tax scale established in 2019 (and applied to the incomes of 2020), as their burdens were significantly reduced. Specifically, the favorable scale with a rate of 9% for the first 10,000 euros of income, from 22% and even from the first euro of income (a bracket that practically covered over 80% of professionals), led to a reduction in income tax by 1,300 euros.
At the same time, the solidarity levy was abolished for incomes over 12,000 euros, while the advance tax was reduced to 50%.
For example, a self-employed person with a net income of 10,000 euros paid 2,200 euros in taxes to the tax authorities in 2019. With the change in the scale, the tax was reduced to 900 euros. That is, the benefit reached 1,300 euros. A professional with an income of 15,000 euros paid a tax of 3,366 euros to the tax office and with the change the tax was reduced to 2,000 euros.
In contrast, those with incomes between 20,000 and 50,000 euros, most of them salaried, saw charges reduced by just 17 euros per year. The employees are the ones who obviously have no way to evade taxes and therefore bear any fiscal adjustment. So the burden of the reforms in the next four years will fall, according to a government agent, on the middle class, with a new reduction in insurance contributions and also in tax rates after the first steps. It is noted that the abolition of the solidarity levy marginally reduced the burdens.
The middle class accounts for 15% of the total number of taxpayers and pays a total of more than €5 billion in taxes, i.e. more than 45% of the total personal income tax.
a) Income tax reductions of up to 320 euros per year for those who declare annual incomes above 8,636 euros and up to 19,000 euros and have up to three dependent children.
b) Income tax reductions of just 17 euros per year for those who are not burdened with children and declare annual incomes above 19,000 and up to 50,000 euros.
c) Zero changes in income taxes for those who are burdened with a dependent child and declare annual incomes above 19,000 and up to 52,000 euros.
d) Income tax reductions of just 40 euros per year for those with two dependent children who declare annual incomes from 20,000 to 57,000 euros.
According to information, the report requested by the financial staff from IOBE is expected to be delivered after the national elections and will include:
• Descriptive analysis of the institution of the self-employed in the Greek economy (labor force share, income tax revenue share, treatment in relation to salaried employment in terms of taxation, insurance contributions and benefits of the social security system).
• Analysis of the structure, rates and revenues from self-employed taxes (such as business tax, income tax, advance tax, various tax exemptions) in Greece.
• Highlighting international practices in self-employed taxation, including countries with similarities to Greece in terms of size and/or structure of economic activity.
• Proposals for reforming the taxation framework of the self-employed in Greece with the aim of broadening the tax base – estimation of expected revenues from indicative scenarios of measures, e.g. incentives for electronic payments, changes in income taxation.
Changes in the taxation of income from real estate
Also on the agenda for the next four years is the change in the scale for taxation of rental income, which has not changed since 2015. Rental income is taxed from the first euro. Specifically, for income up to 12,000 euros the rate is 15%, for income from 12,001 euros to 35,000 euros the tax rate is 35% and for income over 35,001 euros the rate is 45%. The Finance Ministry plans to change the way rental income is taxed, with the aim of making charges more proportionate.
The government is thinking of adding one or two more tax brackets in order to limit the huge burden on those who earn income from property. Based on the scale, for a taxpayer who obtains a total net income of 20,000 euros from rents, the tax amounts to 4,600 euros. For another taxpayer who obtained in 2022 a total net income of 35,000 euros from rents, the income tax reaches 9,850 euros.
A second proposal under consideration, which appears to be garnering a lot of support, is to reduce the income tax on primary residence rentals and keep it at the same levels for those operating in short-term rentals. In this way, it is expected that many properties will be freed up and offered for primary residence, at the same time leading to a reduction in rental prices that have reached heights.
I am Janice Wiggins, and I am an author at News Bulletin 247, and I mostly cover economy news. I have a lot of experience in this field, and I know how to get the information that people need. I am a very reliable source, and I always make sure that my readers can trust me.