ECONOMY

Most taxpayers declare monthly incomes of less than 1,000 euros

most-taxpayers-declare-monthly-incomes-of-less-than-1-000-euros

While the Finance Ministry is considering raising the tax-free threshold for annual incomes to 12,000 euros, data from this year’s processing of tax declarations, which Kathimerini has seen, show that there has been a massive shift of the population from the upper- and medium- to the lower-income brackets.

Of the total 5.9 million income statements for the 2014 financial year submitted by the end of August, some 3.7 million, or 62.82 percent, showed household incomes of less than 12,000 euros.

Since 2010, when the country entered the bailout programs, the proportion of Greeks living on lower incomes has grown by 14 percentage points. In 2010 the number of taxpayers with a family income of less than 12,000 euros amounted to 2.78 million, almost a million fewer households than today.

If the ministry does raise the tax-free threshold to 12,000 euros, five out of eight households in Greece would stop – either due to reduced incomes or tax evasion – contributing toward income taxation, leaving the total income tax bill (more than 8 billion euros per annum) for the remaining 2.2 million households earning more than 1,000 euros per month to pay.

It is therefore clear that the prospect of the tax-free threshold being raised to 12,000 euros has met with wide social acceptance because it affects the vast majority of households, despite the fact that the per capita benefit is small, given that the tax-free threshold stands at 9,550 euros today. On the other hand it would have a great fiscal cost: Even if just 200 euros is shaved off the taxation of each lower-income household, the total could rise up to 600 or 700 million euros per year, as those benefiting from the measure will number between 2 and 3 million households.

Among the so-called lower-income brackets there are currently property owners who make a living out of rents, as well as farmers and freelance workers whose income tax rates are up to 26 percent from the first euro, so a rise in the threshold would hurt state coffers considerably.

The comparison of 2015 income data with those of 2010 is impressive: The so-called “haves” (i.e. those with an annual family income of more than 50,000 euros) have shrunk from 244,844 in 2010 to 110,000 this year. The 30,000-50,000-euro bracket hosts some 400,000 households against 604,000 in 2010, while the so-called lower-middle class making 20,000-30,000 euros per year numbers just 555,000 households from 752,000 five years ago.

The data also show that the middle class (20,000-50,000 euros) has seen its annual earnings drop 30 percent in five years.