ECONOMY

Higher taxes for higher incomes

Finance Minister Giorgos Papaconstantinou is set to announce next week a new tax bill, under the watchful eye of the European Commission, which will include tougher measures for all taxpayers. The draft law’s main points will be the abolition of individualized taxation, the creation of a single bracket for all incomes, a dramatic cut in tax exemptions and major changes in the way real estate is taxed. After the recent rise in the special consumption tax on alcohol, tobacco and fuel, the freezing of public-sector salaries and the cutting of other expenses, the government is aiming at the full implementation of the Stability and Growth Program through measures that add a further burden on salary-workers and pensioners, while trying to contain the ever-growing tax evasion. The new income tax bracket will have a tax-free threshold of 12,000 euros, according to sources, while creating two different levels in order to support low- and medium-income taxpayers: Those earning between 12,001 and 15,000 euros a year will likely have a 15 percent tax rate. Higher incomes will definitely get a more serious burden, with incomes from 40,000 euros and up having a higher rate than today. At present, the rate for incomes from 30,000 euros to 75,000 euros stands at 35 percent. Although the tax-free threshold will likely remain at 12,000 euros, this will be linked with the receipts taxpayers produce. The level of income each taxpayer declares will have to be backed up with a specific amount of euros in receipts. Otherwise, the tax-free ceiling will be lower than 12,000 euros. Low-salary workers and pensioners will be asked for receipts adding up to 1,000 euros per year, while taxpayers declaring incomes of over 70,000 euros will need to produce receipts equal to the generation of their income. All receipts will be accepted by the tax authorities except for utility bills and major purchases, such as that of a car.