650-Euro low income earners under the ‘hammer’ with new tax system

Doubtful whether measures will actually produce results

The Greek government is ‘loading’ the ‘tab’ of the measures on low income earners, in an effort to strike a deal with its creditors before Orthodox Easter. Greeks with a monthly salary between 650 and 2,000 Euros will shoulder the taxation and social security reforms, with employees expected to see an immediate impact on their wages in May, if the bill is passed after Easter. The new measures will essentially ‘wipe out’ incomes in the middle class, given the rises in indirect taxes and income withholdings. Greek Finance Minister Euclid Tsakalotos and Economy Minister George Stathakis will meet with the Quartet at 10am, Wednesday, to discuss fiscal measures to be included in a bill with sweeping reforms in social security and the tax system. So far there is no deal with the EU institutions on the ‘preventative measures’, as a government source said the Greek side had not approved them after the first meeting between Tsakalotos and the country’s lenders Tuesday. The proposed new taxation bracket will see low income earners bear the brunt of the the measures, with the government hoping it can cover at least 1bln Euros of the 1.8bln the Quartet is asking for via direct taxes. In order to avoid cutting public sector wages, the the Greek government has decided to place the bulk of the burden on the the private sector employees. It is indicative that according to the new taxation system, a person earning a mere 650 Euros per month will have to pay taxes. An employee with an annual income of 10,000 Euros will pay 100 Euros more (a total of 200 Euros) in 2017 in taxes based on the proposed tax brackets. In theory only those making between 28,000-45,000 Euros per annum or 50,000-55,000 per annum will pay less taxes. The Greek government is desperately trying to close a deal with its lenders and receive a disbursement from the program, as the state coffers are running out of money ahead of 2 payments to the IMF and ECB in summer.