BUSINESS

Taxpayers’ bill to rise by 1.8 bln euros

PROKOPIS HATZINIKOLAOU

The country’s 8.5 million taxpayers will have to fork out an extra 1.8 billion euros per year in income tax alone according to the set of new measures the government presented on Tuesday in Parliament. In the next few days another bill will follow concerning taxation on consumption.

The tax reform provides for a reduction in the tax-free threshold, a single set of rates for salary workers, pensioners, the self-employed and farmers, and for an additional burden on taxpayers through the solidarity levy.

The government’s proposal for the tax-free threshold is 9,100 euro per annual income, down from 9,550 euros to date. This means the tax credit will go down from 2,100 euros per year to 2,000 euros concerning incomes of up to 20,000 euros, above which the tax credit will be reduced by 10 euros per 1,000 euros of income. Therefore, the tax credit for an income of 25,000 euros will be 1,950 euros.

The above will only apply to salary workers, pensioners and farmers, as self-employed professionals will be taxed from the first euro of income, although their professional expenditure can be tax-exempt.

The tax rate for the first 20,000 euros of income will be 22 percent, rising to 29 percent for the next 10,000 euros (from 20,001 to 30,000 euros), then to 37 percent for the 30,001-40,000-euro income band, and to 45 percent for annual incomes in excess of 40,000 euros.

The bill provides for tax cuts for most self-employed professionals, as the tax rate for incomes up to 50,000 euros per year will be reduced from 26 percent to 22 percent. However, as of 2017, professionals with two sources of income (from salaried work and a freelance occupation) will have to endure significant tax hikes.

The highest earners – i.e. on incomes of 55,000 euros per annum or more – will be subject to a considerable increase in taxes: A salary worker with an income of 70,000 euros will see his or her tax bill grow by 1,151 euros, while a taxpayer with an income of 100,000 will face a hike of 3,851 euros.

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