ECONOMY

Subsidies for the wealthier, too

subsidies-for-the-wealthier-too

The government is changing its subsidy policy to include all sincere taxpayers, not just low incomes, real or declared.

There are real examples of that change: the Gefyra (Bridge) program subsidizing mortgages and the new phase of the program subsidizing home improvements that will make residences more energy efficient.

In the Bridge program the income tax, the so-called “solidarity tax” in favor of lower incomes and “occupation tax” paid by all freelance professionals are all discounted from gross income. This is the first time a Greek government has introduced real disposable income as an eligibility criterion for a subsidy.

Those eligible to receive subsidies to upgrade their property’s energy efficiency can include taxpayers of relatively high wealth (up to €90,000 in individual income or €120,000 in family income). In practice, this means that being earnest in filling out income tax declarations, and not hiding income sources on purpose, no longer makes someone ineligible for a subsidy program.

There could be new subsidy programs, or extensions of the old ones, very soon. Finance Ministry officials are considering a Bridge 2 program with similar features. Whether this will happen or not will depend on the success of the original Bridge program and whether there will be a second pandemic outbreak. There are precedents for such an extension; some subsidy programs are in their fourth iteration.

In drawing up its multi-year budget (2021-23) the government is considering measures such as the gradual elimination of the solidarity tax and new income tax brackets, as well as calculating tax rebates so as to favor middle and high incomes.

There are multiple reasons for this policy: first, to reduce the number of counterincentives to taxpayers’ declaring their real income; second, to help create better-paying jobs, which in turn will provide more state revenue; third, to change the eligibility for subsidies from nominal to disposable income.

At the Finance Ministry, they hope that the 2021-23 growth plan that will be drawn up by October 15 will also describe how European Union funds from the EU’s recovery fund will be used and that there will be enough leeway to fund tax cuts for middle and high incomes.