BUSINESS

Solidarity levy set to shrink as of July

PROKOPIS HATZINIKOLAOU

TAGS: Finance, Taxation

Taxpayers on middle incomes – i.e. earning from 12,000 to 50,000 euros per year – will benefit annually by between 2.2 euros and 207 euros from the reduction of the solidarity levy in the second half of 2020, Kathimerini understands. On an annual basis the cut amounts to 4.4-415 euros.

The government’s plan provides for the gradual abolition of the levy to begin from July 2020 and to be completed in 2021. There are many scenarios on the table, and they all depend on the fiscal space to be created. The definitive decisions will be made in May, when the government has the first concrete data from the execution of the budget, concerning the year’s first quarter.

The most likely scenario currently is for the slashing of the solidarity levy by 20 percent for the second half of 2020, which will set the budget back by less than 200 million euros. Salary workers will feel the benefit immediately from July, when their deductions will be reduced, while freelance professionals will see a decline in 2021, when they have their tax declarations processed.

In case the fiscal leeway is greater, the government could slash the levy by 30 percent, which would entail an annual benefit ranging from 6.6 euros to 623 euros for those in the 12,000-50,000-euro yearly income bracket.

For 2021, provided the government agrees with its eurozone creditors on the reduction of the primary budget surplus target, the levy will be abolished altogether. This development is set to benefit the bulk of taxpayers who over the last decade have borne the brunt of the fiscal streamlining.

The solidarity levy was introduced in 2011 for individuals earning in excess of 12,000 euros per annum, and was supposed to be abolished by the end of 2014. In total taxpayers pay 1.2 billion euros per year, though in previous years it fetched more into the public coffers, as in 2014 it brought 1.5 billion euros.

The levy is calculated according to the total annual declared income of each taxpayer from all sources, unless a taxpayer has assets revealing a higher income than that declared, in which case the levy is based on the estimated income based on the assets (“tekmiria”).

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