Bid to clinch tax code

Prime Minister Antonis Samaras is expected to meet Finance Minister Yannis Stournaras on Wednesday in a bid to nail down the contents of a draft tax code that has become a source of friction within the premier’s fragile coalition.

After leaked reports that the bill foresaw a 45 percent tax on all income above 25,000 euros prompted a furious response from across the political spectrum, Samaras intervened on Tuesday, stressing that no such plans were on the cards. “There is no such thing,” Samaras said during a speech at the Hellenic-American Chamber of Commerce. “I am with the middle class, not against it,” he said.

Samaras is expected to go over the latest tax proposals with Stournaras, who returned on Tuesday from Brussels, where he had attended a summit of eurozone finance ministers. The draft is believed to include increases in income tax for the middle class but tax breaks for families with children. According to sources, ministry officials examined 10 alternative scenarios.

The proposal most likely to be presented to coalition partners for approval foresees an overhaul of the income tax scale with those earning between 25,000 and 48,000 euros to be taxed at 36 percent and incomes of more than 48,000 euros to be taxed at 45 percent. It also proposes replacing the existing 5,000-euro income tax-free threshold with a 1,950-euro reduction in tax that would apply for everyone and would be increased by 5 percent for each child in a family. The tax breaks proposed for those with large families – three or more – are expected to be more generous than those in Stournaras’s original proposal.

Still, it remains unclear whether they will appease the objections of Samaras’s coalition partners, PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis, whom Stournaras is expected to brief later in the day ahead of a possible meeting between all three party leaders. Both Venizelos and Kouvelis have expressed objections to higher taxes for families and the middle class.

In a related development, an Athens court deemed the collection of a special property tax through electricity bills illegal. The ruling can be appealed but until it is, the Public Power Corporation will be unable to cut the electricity supply of those who do not pay their bills.

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