Poor people liable to tax

The lowering of the tax-free threshold to 5,000 euros for a married couple, part of the government?s austerity measures announced this week, is seen leading many taxpayers, including low-income pensioners and unemployed people, paying tax even though their actual incomes are lower than the specified amount.

The reason is that they will be taxed according to assets considered proof of income. On the basis of last year?s 12,000-euro threshold, and the even lower 8,000-euro ceiling, introduced in July, the low-income categories would still go untaxed.

Deemed incomes above 5,000 euros on the basis of assets will be taxed at 10 percent up to 12,000. It may be noted that the threshold is 3,000 euros for a single person.

For example, a pensioner receiving 4,850 euros a year, who lives in a house of 70 sq.m. would not have paid tax until 2010. For 2011, however, the house is deemed as proof of income of 2,800 euros, which raises his total to 5,800 and makes him liable to a tax of 80 euros.

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