BUSINESS

Tax exemptions to be slashed

ROULA SALOUROU, PROKOPIS HATZINIKOLAOU

Seamen will see their tax status compromised or abolished altogether.

TAGS: Taxation

Tax exemption cuts amounting to 180 million euros per year are expected to be confirmed by the government and the creditors in a conference call to take place on Sunday. However, social benefits are not expected to be affected.

Sources say that the tax exemptions likely to be reduced are the heating oil allowance, medical expenses, the special tax status of seafarers and 1.5 percent discount on the tax withheld every month from salaried services.

The sum of the above exemptions is estimated at 385 million euros per annum, but after the cuts are imposed they will add up to only 205 million euros in 2018. The reduction of the above tax exemptions is also included in the revised bailout agreement, along with other exemptions that have not yet been determined, although this may happen on Sunday.

Finance Ministry data show that 1.9 million taxpayers use the tax discount stemming from healthcare expenditure (which is deducted from their taxable income), entailing an annual cost of 120.6 million euros for the state. This will not be abolished, but part of it will enter the new system of electronic transactions, so that only card payments to doctors etc are recognized as deductible.

The special tax status of seamen, which currently costs the state a yearly 91.2 million euros, will either be diluted or abolished altogether. The heating oil benefit has already been cut from last winter to 50 percent of the 2014-15 season, or 105 million euros, and is expected to be reduced further. As for the discount on the tax withheld from 2.9 million salary workers, it sets the state back 67.9 million euros a year and is likely to be abolished.

In total, the sum of the tax exemptions granted to taxpayers and corporations every year amounts to 3.5 billion euros, according to the details the Finance Ministry submits to Parliament. The tax exemptions given to households amount to 388.7 million euros per annum, while those granted to corporations reach up to 700 million euros.

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