A pending reduction in the annual tax-free income threshold - an austerity measure passed by the Tsipras government in 2016 that may be instituted as of Jan. 1, 2019 - to levels of between 5,682 to 6,591 euros will mean added tax burdens for millions of taxpayers in Greece.
By G. Palaitsakis
[email protected]
A pending reduction in the annual tax-free income threshold - an austerity measure passed by the Tsipras government in 2016 that may be instituted as of Jan. 1, 2019 - to levels of between 5,682 to 6,591 euros will mean added tax burdens for millions of taxpayers in Greece.
In the pre-crisis era, the tax-free annual income threshold was well above 10,000 euros, leaving a significant portion of wage-earners and pensioners with no income tax burden at all. Creditors' insistence, however, to expand Greece's very narrow - by west European standards - tax base forced the coalition government to bow to demands in 2016, as part of a revised third memorandum.
Moreover, even taxpayers earning below the tax-free threshold will be ostensibly be obliged to pay some of their income to the tax bureau, assuming their taxable income is calculated based on estimates of cost-of-living criteria, such as the value of the property where they reside and even the vehicles they own.
The biggest "losers" in the coming period are expected to be individuals employed on a seasonal or rotational basis, separated mothers, the unemployed and college students without income from employment but with even "cents on the euro" from the meager interest accrued by bank deposits. People considered as officially indigent, who are the recipients of welfare payments, and taxpayers with even paltry incomes from leased property are also due to come into the "taxman's" sights.
All of the previously untaxed categories of taxpayers, as far as annual income is concerned, will now have income tax imposed to them based on "cost-of-living" criteria. The tax bureau will then examine if this calculated yearly income is subject to the imposition of a tax rate for income exceeding 8,636 to 9,545 euros - the current tax-free threshold for wage-earners and pensioners.
One example is this:
An unmarried wage-earner with a monthly salary of 300 euros (3,600 per year), who lives in an apartment of 80 square meters and who possess a 12-year-old 1300cc car, will be taxed based upon cost-of-living criteria that calculate his annual income at 8,500 euros (3,000 being the minimum cost-of-living level, 3,200 euros the property criteria and 2,300 for the vehicle).
In this case, the taxpayer with be slapped with a income tax bill of 620 euros.