ECONOMY

Talks trip on tax-free allowance

talks-trip-on-tax-free-allowance

The government and the chief representatives of the country’s creditors spent long hours on Wednesday trying to strike a deal on the proposed tax reform, but the tax-free threshold proved to be a stumbling block.

The Greek side is understood to have submitted to the representatives a new proposal that took into account the lenders’ objections to and remarks regarding the Finance Ministry’s plan to plug the budget hole anticipated up to 2018, expected to amount to 5.5 billion euros.

Sources told Skai TV on Wednesday that both sides had made compromises during their first meeting of the day early in the afternoon, and in that context minister Euclid Tsakalotos, other government officials and the creditors’ mission chiefs had a second meeting in the evening.

The ministry is said to have tabled a new proposal on the tax-free threshold, which is said to have been lowered from 9,550 euros of annual income to 7,000-8,000 euros, and on the new set of income tax rates, leading to medium- and low-income earners having to pay an additional annual tax of 600-700 euros.

“Our aim is to close the taxation [issue] tonight,” a senior ministry official said, but the meeting ended late at night without a deal.

“We have not closed it,” Tsakalotos said on his way out of the meeting with the creditors. He added that Friday is now the new deadline for an agreement on the issue, noting that the tax-free threshold will be difficult to change.

Labor Minister Giorgos Katrougalos also had a meeting on Wednesday with the quartet of the mission chiefs, in which they discussed the details of the government’s social security reform proposal. Sources say that the national pension level will come to 384 euros per month for a minimum of 20 years of social security contributions.

In the meantime the Finance Ministry announced the relaxation of capital controls on Wednesday, as it has raised the maximum amount allowed for money transfers abroad from 500 to 1,000 euros per month while also lifting the barriers imposed on the termination of time deposits, in effect since June 28, 2015.