The government yesterday announced a series of tax breaks, which will cost 1.4 billion euros and take the economy to its limit, instead of the tax reforms it had promised. The Cabinet approved measures related mainly to personal income taxes, with special focus on families with many children. This was the third phase of changes to the tax system, following those introducing simplified bookkeeping procedures for companies and lower taxes on inheritances, parental gifts and donations. «The third phase which we decided on today has the aim of simplifying and modernizing the tax system, so that it is more friendly to the citizen. It will boost households’ income and relieve businesses of obsolete practices and abstruse procedures,» Prime Minister Costas Simitis said. The tax-free threshold for wage-earners and pensioners will be lifted to 10,000 euros next year, from the current 8,400 euros. The ceiling rises to 11,000 euros for wage-earners with one child, 12,000 euros for those with two and 20,000 euros for families with three or more children. Tax exemptions for expenses related to rent, childrens’ tuition, medical care, and life insurance will rise next year. A tax on living in your own home, revenue stamps on insurance payouts and some of the so-called objective criteria by which the tax authorities determine incomes will be scrapped. «These measures will benefit wage-earners and pensioners, especially those categories that have low incomes. It exempts many Greeks from having to pay taxes and it lowers the tax obligation for all. It promotes tax fairness, and I believe that it promotes it very much,» Simitis said. He announced measures benefiting self-employed professionals and streamlining the operations of small- and medium-sized companies, which he described as «the backbone of our economy.» «The total cost of all these tax reform measures that I referred to will come to 1.4 billion euros, in other words 1 percent of the country’s GDP. In this way we are modernizing our tax system, reducing the operational costs of businesses and boosting the family’s buying power. We are helping those who are weak and we are achieving greater tax fairness,» Simitis said.