The pre-memorandum is hiding bigger hikes in incomes and properties

The new tax package, as described in the pre-memorandum, provides for new hikes in income, property and savings, coupled with the elimination of tax exemptions.

As revealed by the 50-page draft agreement, the Greek government must complete the procedures for the radical reform of the tax system by June 2012 the latest, based on six guidelines:

-   abolition of tax exemptions and preferential tax statuses, which will affect mainly middle incomes and real estate of households and businesses

-   ban on new debt arrangements and any granting of tax amnesty for tax offenses and debts

-   simplification of income taxation of individuals and legal persons. This conceals measures such as the elimination or reduction of the the current tax-free income limit of 5,000 euros

-   simplification of the tax scale and reduction of the number of tax brackets, from the current eight to possibly three or four. In this case, however, the progressive escalation of tax rates is eliminated and results in additional burdens with the placing of incomes on higher levels

-   single tax treatment of personal income from capital, i.e. simulation of tax on personal income from real estate and income from securities (interest on deposits, bonds, etc.). The implementation of these measures will lead to a substantial increase of taxes on real estate rent, thus, income will be taxed separately at a rate of probably 20%, and with no tax-free limit. It will also lead to an increase of taxes on interest of deposits and bonds from 10% to 20% and the imposition of a 20% tax on capital gains from stock sales and redemptions of mutual funds

-   abolition of the Code of Books and Records and replacement with simpler legislation.