Objections to the tax bill by the IMF

The new tax bill with last-minute changes will be ratified by the European finance ministers before being submitted to the political parties and the Greek parliament. Yannis Stournaras is headed for Brussels tonight with the last two remaining prerequisites to pave the way for the next tranche: the result of the repurchase of bonds and the new taxation system.

The new tax bill changes the taxation of individuals and businesses, provides a new tax scale for all and hides a capital gains tax of 20% on the sale of shares and businesses. However, it has been met with resistance by the political parties and the Troika.

The provision for family allowance taxation seems to be heading towards withdrawal after the strong opposition by the coalition parties. The Greek government is considering not issuing the allowance for children as a whole (40-50 euros per child and 500 for each of the third and above) but keep it fixed at 40 euros regardless of the number of children.

The Troika raised several objections to:

- the increase of benefits for families with 4 children or more

-  the 50% favorable tax discount for young professionals who will be taxed at the rate of 13% for a 10,000-euro income in the first 3 years from the commencement of their activity

-  the exception from bookkeeping of farmers with small incomes, who will also not be taxed as freelancers

These objections have been raised especially by the IMF, while the EC believes the differences are negligible and accepts the entire bill.

The tax bill includes upsets regarding the taxation of employees and pensioners, as it provides three scales with an initial rate of 21% replacing the current 10%. And this scale is a point of friction between the IMF and the economic team.

Officials will also eliminate the general tax-free limit of 5,000 euros for a tax credit of 1,950 euros which will be cut from incomes of 18,000 euros and more and disappear completely from those over 43,000. It particularly affects large families with income exceeding 15,000 euros. But everyone loses from the elimination of tax exemptions, although until the passing of the bill we might eventually see the rescuing of the exemption from interest tax on housing loans for the first residence.