Middle class bear brunt of taxes

Middle class bear brunt of taxes

Greece’s beleaguered middle class is yet again set to bear the brunt of the government’s tax policies in 2019.

This has been made abundantly clear in Greece’s first post-bailout budget, according to which there will be no easing of pressure on people making more than 15,000 euros per year in taxable income.

Some 1.67 million taxpayers will be asked to pay 85-90 percent of the total income tax and ENFIA property tax in 2019. In other words, 1.6765 million people with average annual incomes of 23,500-24,000 euros will be expected to cough up 43 billion out of a total of 72-75 billion paid by all taxpayers.

Analysts say the increase in pressure on those making above the tax-free threshold of 15,000 euros is because, each year, more and more people are submitting income declarations that are below this amount and because the number of people whose earnings are reduced is growing.

This is most likely due to the continuous drop in private sector wages and to tax evasion by self-employed professionals.

Under the country’s tax laws, a self-employed professional who declares an annual income of 15,000 euros will be left, after tax, with 7,000 euros. Broken down, he or she will pay 3,300 euros in income tax, 650 euros in professional levies and around 4,000 euros in social security contributions.

Moreover, the reduction in the ENFIA property tax that was recently announced amounts to just a few dozen euros for those with property worth up to 200,000 euros.

This essentially means that eight out of 10 property owners will pay 25 percent of total revenue from the ENFIA tax, while two out of 10 will shoulder 75 percent of the property tax.

The issue of the rising tax burden on the middle class triggered a fiery debate between Prime Minister Alexis Tsipras and New Democracy leader Kyriakos Mitsotakis in Parliament last week.

In 2014, the number of private sector employees with earnings of up to 700 euros per month came to around 710,000. By the end of 2017, this number had risen to 830,000, while the figure is expected to show an even greater increase for 2018.

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