45% tax from 26,000 euros and upwards

The alternative scenarios examined by the Finance ministry, in case it takes back the abolition of tax-free limits for children due to the opposition, are shocking.

With the tax-free limits for children as a pretext, the government subverts the tax scale for individuals for the worse and seeks to impose a 45% rate on income from just 26,000 euros and upwards, in order for the numbers of increasing government revenue from the new measures to pan out.

According to information, the economic team of the government turned to this solution as a counterbalance measure to maintain tax exemptions for families with 3 children and large families. The plan provides for a 21% tax rate on income up to 18,000 euros, 26% from 18.001 -26.000 euros and 45% for incomes of over 26,000 euros.

The previous scale provided a rate of 21% up to 25,000 euros, 36% from 26,001-47,000 euros and 45% from 47,000 euros upwards. If the ministry carries out its threat, it will bring very heavy burdens on incomes of 2,100 euros and more.

Thus, a taxpayer with an annual income of 28,000 euros in 2013 will eventually have to pay a tax of 6,760 euros and not 6,330 as it would have been with the previous tax scale.

However, the Finance ministry is also examining alternative scenarios to cover the cost of the 450 million euros, in case it maintains the tax-free children limits as required by party representatives.

As an equivalent measure for the 450 million euros, it is considering imposing a poll tax of 2,000 euros on freelancers. Instead, the parties have proposed an increase in the current tax credit of 1,950 euros provided for in the new uniform scale, either by 5% or by 200 euros per child. They have also proposed increasing the tax rate on high-value properties and the tax on savings from 15% to 17.5%.

All this will be examined and discussed at the next meeting between Yannis Stournaras and the representatives of political parties on Wednesday. According to Finance ministry officials, however, the tax bill will be tabled in parliament no later than December 11, and will include at least the prerequisite memorandum provisions (tax brackets, etc.), while the other provisions will be filed in January 2013.