The tax-free ceiling for salary earners and pensioners will go up from 10,000 euros to 11,000 euros annually as of next year, Economy and Finance Minister Giorgos Alogoskoufis announced yesterday. The measure will mean that under the existing tax scale, those earning 11,000 euros will save 150 euros. The tax-free ceiling for the self-employed will also go up by 1,000 euros to 9,400. Alogoskoufis said income and corporate taxes will be gradually reduced after 2005, and the exemption on interest paid for mortgages will go up from 15 percent to 20 percent. Alogoskoufis and those drafting the tax bill are also considering various revisions of the tax scale, more specifically, the addition of another tax rate between the top two. This will mean a tax rate between those high-income earners presently taxed at 30 percent and 40 percent; the new rate may range between 32 and 33 percent. The minister further announced that every year until 2007 there will be a new tax scale, with gradual rate reductions. Owing to the considerable raising of the tax-free ceiling, he stressed, the tax scale will not be inflation-indexed. The government has decided that the current deduction of a part of mortgage interest from taxable income affects people with small and medium incomes, so the discount will increase from 15 percent now to 20 percent. This will apply to loans taken out from January, 2003 and will benefit taxpayers who will submit their income tax return in 2006, for next year’s earnings. Breaks from taxable income will also rise to 20 percent from 15 percent for medical expenses and health insurance premiums. Enterprises will also see their tax rates reduced by 2007. According to sources, there will be three stages of rate reduction, starting from 2005 when the tax rate will fall to 32.5 or 32 percent. In 2006, it will be reduced to 29 percent, and it will reach 25 percent in 2007. Rate reductions refer to total profits, distributed or not. Other measures the government is considering with a view to bolstering business will be contained in a development bill (starting with disengaging employment from investment incentives) and will include incentives for corporate mergers. To attract foreign investment, the government intends to amend provisions that discourage foreign investors. These and other clauses to the development and tax bills are expected to be confirmed today at a meeting of government officials with interested parties.