Gov’t to cancel measures aimed at easing pressure on middle classes

Gov’t to cancel measures aimed at easing pressure on middle classes

The government will table an amendment just before Parliament is dissolved that will scrap not only the reduction of the tax-free threshold planned from January 2020, but also the measures aimed at easing the pressure on the middle classes (known as countermeasures).

While the government acknowledges in its rhetoric that the burden imposed on the middle classes was one of the main reasons for its landslide defeat in the May 26 European election and has promised to pay more attention to this section of society, in practice it is doing the opposite, canceling regulations that point in that direction.

The 2020 countermeasures, approved in the same bill as the reduction of the tax-free ceiling, provided for the abolition of the solidarity levy for annual incomes up to 30,000 euros and its reduction for higher incomes, along with cutting the lowest income tax rate from 22 percent to 20 percent, a 70-euro decrease in the Single Property Tax (ENFIA) and reducing the corporate tax rate to 26 percent.

Of course the government is likely to argue that Prime Minister Alexis Tsipras has also announced other measures for 2020 that partly substitute the abolished countermeasures. However, they still have to be voted on in the 2020 budget next winter.

In any case, the measures Tsipras announced last month do not include the reduction of the income tax rate, and the abolition of the solidarity levy will only concern incomes up to 20,000 euros, not those up to 30,000 euros. The ENFIA discount plans have been scrapped, with the exception of islands with less than 1,000 inhabitants.

The other measures Tsipras has announced for 2020 provide for the reduction of the medium value-added tax rate, the restoration of reduced taxation on islands with up to 3,100 inhabitants, and an increase in the heating oil subsidy for mountainous areas, among others.

The European Commission commented on all that in its report released on Wednesday with the comment: “For now, these announcements remain declarations of intent for future policies.”

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