Minister unveils series of tax cuts

Pensioners, homeowners and workers on low wages are among those who will benefit most from a range of tax reforms announced by Finance and Economy Minister Giorgos Alogoskoufis yesterday. Alogoskoufis said he would raise the level of tax-free income from 10,000 to 11,000 euros per year. This measure is aimed at low-paid workers and pensioners, who from 2005 will save 150 euros a year in taxes if their annual income is between 10,000 and 11,000 euros. «Our strategy is to help our economy breathe with the help of the new development law and the taxation system,» said Alogoskoufis. The finance minister has also decided to raise the interest discount that mortgage-payers receive from 15 to 20 percent. This means that anyone paying a mortgage will have the equivalent of 20 percent of the amount they pay in interest annually deducted from the salary they declare at the end of the year. This measure relates to loans taken out from January 1, 2003 and will be applied to tax declarations submitted in 2006. A similar scheme will operate for medical expenses, with 20 percent, instead of 15, of the value of annual medical bills being subtracted from taxpayers’ declared salary. Alogoskoufis is also looking at introducing a new tax bracket. Currently top-rate tax is set at 40 percent, with 30 percent being the next band down. He is considering the introduction of another rate of 32-33 percent. He is also planning to gradually reduce corporate tax from around 32 percent next year to 25 percent in 2007.