New Democracy is planning to bolster Greece’s middle class, which has borne the brunt of the fiscal adjustment, through a package of measures that will need to secure the approval of the creditors if the conservative party wins next month’s general elections as predicted.
The center-right party’s taxation plans aim at lightening the load on the middle class, which has become too heavy for thousands of taxpayers. Salaried workers and freelance professionals are paying taxes and social security contributions that add up to more than 60 percent of their incomes. ND intends to reduce their contributions to state coffers and social security funds to 45 percent as of 2020.
The opposition’s original plan provided for three tax brackets, ranging from 9 percent (down from 22 percent today) to 40 percent (from 45 percent) on the basis of a tax-free ceiling reduction from 8,636 euros to 5,685 euros of annual income that ruling SYRIZA voted into law. Now the ND plan calls for the reduction to be abolished, in combination with a reduction of the lower tax rate to 9 percent for incomes up to 10,000 euros per year.
A senior party official told Kathimerini that ND is now preparing for more than three income tax brackets in order to contain the cost on the budget from the non-reduction of the tax-free ceiling. He added that the changes would be introduced in 2020, therefore applying to next year’s incomes. The precise number of changes that would be introduced to the tax system would stem from the European Commission’s report on the Greek economy, expected next month.
In any case, the same official notes, the plan would be presented to creditors and examined without any prerequisites, meaning that ND would ask creditors to amend most of the tax interventions voted in 2017. This is because the ND program includes the full abolition of the charge for exercising certain professions and the gradual abolition of the solidarity levy.
Asked how those changes would be financed, the same ND official said all alternative solutions will be examined, from the redistribution of expenses that could offer up to 2 billion euros, and mainly through structural reforms that should lead to the expansion of gross domestic product.