NEWS

Tax cuts on the way for start of 2007

The Economy and Finance Ministry is examining the gradual introduction of income tax cuts as of next year in an attempt to reduce incentives for tax dodgers and stoke economic growth, sources told Sunday’s Kathimerini. A team of experts has written up the proposals for Finance Minister Giorgos Alogoskoufis to assess. The proposals focus on lowering income tax rates for salaried workers, pensioners, farmers and professionals. The tax-free threshold will be lifted to 12,000 euros from 11,000 euros currently, according to the plan, while the rate applicable on incomes up to 50,000 euros will be gradually cut to a flat 25 percent rate by 2009. Some 7 million people will see a boost in their disposable incomes from these changes, sources pointed out. Currently the state takes 30 percent from income earners receiving between 13,000 to 23,000 euros and a 40 percent chunk of incomes above 23,000 euros. The plan is seen as an overhaul of an aging tax system that will help fuel consumption and add incentives for economic growth. The government has already delivered the first part of its reforms package to the tax system. The ministry announced early in December 2004 that the corporate tax rate on profits will be cut from 35 percent to 25 percent by 2007. Ministry sources said that the possible adoption of the proposals will depend on the course of government revenues through the summer. If adopted, the tax cuts are likely to be passed in September.