ECONOMY

Record low taxable incomes

record-low-taxable-incomes

Greek taxpayers are this year set to declare the lowest amount in taxable incomes (for 2020) since the country entered the eurozone in 2001, with that figure not even expected to surpass 70 billion euros.

Besides the impact that will have on income tax takings, the artificial impoverishment to be reflected in tax declarations will also have other consequences: It will lead to a great rise in the number of social handout recipients, the payment of higher benefits to current recipients and the taxing of more taxpayers based on their assets (the “tekmiria” system), which is set to force the Finance Ministry to review this system for this year at least.

The government has already made provisions for higher social handouts through the Labor Ministry, raising their projected sum for 2021 to €4 billion, against €3.368 billion in 2020.

The budget estimate for income tax revenues this year is slightly higher than the 2020 takings, at €10.193 billion from €10.03 billion last year; however, this forecast is already considered at risk: Besides the significantly reduced tax dues expected this year, the employment contract suspension measure will continue to apply for this month too, meaning that the first two months will be lost for 600,000 workers – one in every four across the private sector.

The record loss of taxable incomes anticipated will have three main effects that the government is concerned about. The first regards the increase in the number of people at risk of being taxed according to their “tekmiria” and not their declared incomes; although the government intends to review this system, it is a politically sensitive issue with major fiscal significance too.

The second effect pertains to the increase in the number of potential handout recipients. The bulk of the €600 million the Labor Ministry has set aside for covering this effect of impoverishment is set to go toward children and housing benefits. The ministry intends to contain that by factoring in the income criteria the monthly compensation for furloughs.

Finally, the number of taxpayers entitled to a tax rebate will soar, due to shutdowns and furloughs.