ECONOMY

Pissarides committee calls for single taxation for incomes

pissarides-committee-calls-for-single-taxation-for-incomes

All incomes from a series of sources should be taxed in the same way, according to an action plan prepared by the committee of experts led by Nobel Laureate Sir Christopher Pissarides.

The blueprint that is set to be released on Tuesday proposes that revenues from property rentals, capital gains from securities and possibly dividends should be taxed according to the same set of tax rates as the incomes of pensioners, salary workers and freelance professionals.

Today the tax on revenues from rent ranges from 15% to 45% depending on the level of income, while earnings from stocks and bonds are independently taxed at a 15% rate and dividends at 5%.

If the government adopts the proposal to tax all kinds of revenues in the same way without reducing the tax rates, there will be significant hikes in many taxpayers' dues.

However, the committee is recommending slashing tax rates after the first few brackets –.e. for the lowest incomes. This cut would be combined with the definitive abolition of the solidarity levy (which has been suspended for 2021 due to the pandemic).

The committee's economists are also seeking changes to the fiscal policy too, asking for the scrapping of the high primary budget surplus targets (of 2.5% of gross domestic product after 2023) that Greece has undertaken; instead, they are proposing milder and more realistic primary surplus targets of 1%-1.5% of GDP. They argue that public spending should be increased, but at a lower rate than GDP, with an increase in the Public Investments Program.

The action plan also provides for major interventions in the social security system: The committee proposes the strengthening of the proportional character of the main pillar of the pension system, the transition from the pay-as-you-go social security system for auxiliary pensions to a pay-as-you-earn one, and the bolstering of the auxiliary and private pillars of social security.