Draft bill includes variety of direct, indirect tax hikes; no prior approval by creditors
By Giorgos Kouros
A draft bill expected to be tabled next week without creditors’ prior approval includes fixed measures for direct taxes, worth 1 percent of GDP, but is still sketchy in terms of indirect tax hikes, which must also reach 1 percent of GDP.
The government unexpectedly announced the draft bill on Tuesday, along with another piece of legislation on pension reform, saying that the legislative process allows for negotiations to continue with creditors in order to achieve a first review of the Greek program before the draft bills are voted on in Parliament by the end of the month. Nevertheless, last July's agreement with creditors foresees that such finance-related legislation first get creditors' approval through negotitions and consultations.
Question marks remain over the issue of the VAT rate in the country, with lenders previously demanding hikes in the rate tacked on to utility bills and a raising of the lower rate (13 percent) to reach the highest rate (23 percent).
A three-way press conference by the finance, economy and labor ministers in Athens on Tuesday more-or-less confirmed, as “N” has reported, the following:
- Special consumption taxes on fuels will increase
- another hike in tobacco products (from 0.20 cents to 1 euro per pack)
- another hike in the tax on mobile telephony
- the “debut” of a tax on cable TV subscriptions
- an “overnight fee” on hotel stays
In terms of direct taxes, a cut in the deductible for incomes between 10,000 and 22,000 euros means that the tax-free ceiling will hover at 9,090 euros from the roughly 9,500 euros rate that is applied currently.
Based on the ministers’ statements, the income tax rates for Greek taxpayers will be:
- 22% for the first 20.000 euros of yearly income.
- 29% for the next 10.000 euros (from 20.001 to up 30.000).
- 37% for the next 10.000 euros (from 30.001 up to 40.000).
- 45% for yearly incomes above 40.000 euros.
