BUSINESS

Tax cuts will throw lifeline to enterprises

PROKOPIS HATZINIKOLAOU

TAGS: Taxation, Finance

Hundreds of thousands of self-employed professionals and one-person businesses are eager for new tax rates to kick in and ease some of the pressure they have been under over the past few years.

Taxpayers who have managed to increase their income as a result of hard work have seen between 70 and 75 percent of that go to the state. The money left over was so little they often had to dip into whatever savings they may have put aside in order to make ends meet.

Now, according to a top Finance Ministry official, the changes that will be made on tax rates, as well as the upcoming reduction of the social security contributions, will reduce the proportion of income that goes to the tax authorities and pension funds to between 55 and 60 percent over the next couple of years.

As things stand, a self-employed professional with a taxable income of 198,000 euros per year has to part with 110,018 euros in income tax and tax deposits, 15,976 euros for the solidarity levy, 650 euros for the levy to practice a profession and about 17,000 euros for social security contributions.

This is just over 72.5 percent of the annual income earned. The tax cuts planned will add 34,000 euros to his or her disposable income.

According to tax expert Nikos Frangiadakis, the reduction of rates is essential, as the current situation has fueled an increase in tax evasion and resulted in the closure of many businesses.

The reduction of tax rates combined with efforts to slash red tape will also provide ample incentive for investments, leading to the increase in state revenues, he adds.

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