BUSINESS

Solidarity levy cut next year

PROKOPIS HATZINIKOLAOU

TAGS: Taxation, Finance

Incomes will receive a fresh boost from next year by way of a reduction – and eventual abolition in 2023 – of the solidarity levy that the government is preparing so that households channel the extra cash into consumption.

The reduction in salaries as a result of the pandemic has led the Finance Ministry to take further measures aimed at supporting all workers. The amount the government is seeking to slash from the solidarity levy next year comes to 350 million euros, although the final decisions regarding the precise amount of the reduction will be made in September after discussions with the country’s European creditors and the setting of the fiscal targets for 2021.

The extent of the changes will also depend on an unforeseeable element, which is whether there will be a second wave of the pandemic this fall, as that would force the government to once again tap its cash reserves to support workers and enterprises.

In any case, the ministry has informed the creditors about its intentions – i.e. to slash taxes and social security contributions by €2 billion next year provided that things revert to near normality from September, say sources.

The benefit for taxpayers from the reduction of the solidarity levy will start from €6.6 per year for annual takings up to €13,000, and reach up to €623 for incomes of €50,000.

The government’s plan provides for the gradual abolition of the solidarity levy to start in January 2021 and be completed by 2023. The scenarios being examined depend on the fiscal leeway to emerge from the first safe data concerning the course of the budget this year and how the pandemic develops, say ministry sources.

Salary workers and pensioners will enjoy the benefit from January 2021 through their monthly takings with smaller deductions, while self-employed professionals will have to wait until the processing of the 2022 income tax declarations. In that year a further cut will take place, ahead of the full abolition in 2023.

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