By Prokopis Hatzinikolaou

The provisions of the new draft law on taxation, containing the government’s latest austerity measures, are leading to an additional burden mainly on those on lower incomes and families with three or more children.

It is the drastic lowering of the tax-free ceiling from 12,000 euros to just 5,000 euros on an annual basis that is forcing the above categories of taxpayers to pay for the government’s inability to reduce tax evasion, further deepening the recession at what is a particularly difficult time for the country.

The additional income tax that families with three or four children will have to pay as of 2012 reaches up to 2,750 euros, while families with two children will be burdened by an extra 1,040-euro bill. In contrast, people on higher incomes (exceeding 100,000 euros) will only have to pay 2.6 percent more than in 2011 (for income generated in 2010).

While the tax-free ceiling is going down to 5,000 euros, reduced by a staggering 58.3 percent, it will only be reduced by 3,000 euros to 9,000 euros for those aged up to 30 years and for over-65-year-olds.

The additional tax-free ceilings for taxpayers with children are going up from 1,500 euros to 2,000 for one child and from 3,000 euros to 4,000 for two children. However they will go down from 11,500 euros to just 7,000 euros for three-child families and from 13,500 to 10,000 euros for four-child families.

These changes introduce additional tax burdens for all taxpayers, and a great number of those who did not pay any tax - as their income was low - will have to pay significant amounts to the tax authorities as of next year.

For instance, a family with five children on an annual income of 28,000 euros will have paid some 160 euros in tax this year, but will need to pay 2,700 euros next year in income tax. A taxpayer who is single with an annual income of 15,000 euros, paying 3,500 euros for rent per year and having collected receipts of 4,000 euros will pay 1,140 euros in income tax next year, against just 110 euros this year.

What is more, tax exemptions for medical expenses and spending on rents, mortgage loan interest, life insurance and school fees are being cut by half, from 20 percent to 10 percent.