BUSINESS

Gov’t measures from January 1 to hit taxpayers, businesses hard

PROKOPIS HATZINIKOLAOU

TAGS: Taxation

Taxpayers have already started feeling the impact of the government’s new austerity measures that came into force on January 1, with six new taxes set to eat into households’ already diminished disposable incomes as of this month.

The prices of fuel, conventional and electronic cigarettes, coffee and fixed telephony services have risen overnight, while a number of Aegean islands have seen the termination of the 30 percent discount on the value-added tax their inhabitants pay.

On top of that, taxpayers will also have to submit their income tax declarations for 2016 revenues earlier than usual, meaning they will need to pay their first installment of their dues to the tax authorities by the end of June.

Most salary workers and pensioners will see their take-home shrink due to higher income tax and solidarity levy dues for their 2016 revenues, as the new tax system provides for a reduced tax-free ceiling and revised rates. The tax and the solidarity levy for the last five months of 2016 are calculated according to the new system.

Landlords also face an increase in the tax due on the rent they collect: For their 2016 revenues they will have to pay tax of 15 percent (against 11 percent) for annual takings of up to 12,000 euros, and 35 percent (from 33 percent) for revenues up to 35,000 euros. There is additionally a new rate for rent earnings in excess of 35,000 euros per year, at 45 percent.

Accountants tell Kathimerini that 2017 promises to be a very tough year for taxpayers and enterprises due to the higher taxes and social security contributions, which is expected to lead to an expansion of the black economy, a rise in business closures and growth in arrears to the state and the social security funds as many Greek households and businesspeople will be unable to meet all of their obligations. The latest figures are already showing taxpayers’ and corporations’ debts totaling 94.2 billion euros, a figure that will likely rise above the 100-billion-euro mark by mid-2017.

Worse, the new social security contributions system and the circulars published fail to clarify a series of significant issues, meaning that the implementation of the law will be exceptionally difficult.

As of this year taxpayers will only be entitled to the annual tax discount of 1,900-2,100 if they manage to cover a 10 to 20 percent share of their annual income through electronic payments; the precise rate depends on the amount of income. If they fail to do so, they will face a penalty, with the exception of people living in remote parts of the country or over 70 years old.

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