Taxes under the microscope. Both the current government and the official opposition will present, after the official announcement of the elections, their plans for interventions in fiscal policy of the country for the next 4 years. The government has called for a reduction insurance premiums in order to offload employees who bear the greatest burden, while it seems that a solution is sought for very little involvement self employed in total income from income tax. On the other hand, the official opposition criticizes the cut in dividend rates – which led to a very large increase in the amount of distributed profits of more than 3.5 billion euros – while it seems to favor a reduction in indirect taxes, whose share in the total tax revenue soared to an all-time high.

General income of all taxpayers in the country, as follows from the processing of last year’s tax returns, are estimated at about 80 billion euros. Of these, however, 60 billion euros are declared by employees and pensioners, who, of course, also pay the most in taxes. The declared incomes of pensioners and employees have increased, and this will also be reflected in tax returns for this year. Firstly, because there was no suspension of employment contracts in 2022, secondly, because we had an increase in the minimum wage, and thirdly, because employment increased. However, since the tax scale has not been indexed, the additional income shown by employees (and received by pensioners since the beginning of the year) is taxed at an increasingly higher rate. Thus, if a pensioner’s income in 2022 was 20,000 euros per year, and in 2023 it reaches 22,000 euros, the difference of 2,000 euros will be taxed at a marginal rate of 28%, while so far the highest rate , on which a particular pensioner is taxed at a rate of 22%. Just because the tax scale is not indexed, the share of employees and pensioners in the total tax burden is expected to rise to even higher levels.

In order to somehow relieve workers from the general burden, the current government will include in its program for the next 4 years a further reduction in insurance premiums. Each unit of reduction has a tax cost of around 400 million, so with two units and a total loss of around 800 million, Greece could approach the average OECD tax rate (contributions are also treated as taxes). For an employee earning an average wage (about €1,176 in Greece), the total deduction rate is 36.7% in Greece, compared to 34.5% in the OECD, and for a family with two children and one worker, deductions reach 33.7% compared to 34.5% in OECD countries. 24.6%, which is the OECD average.

The income of all taxpayers reaches 80 billion euros. Of these, 60 billion were declared by workers and pensioners.

Freelancers and the self-employed are also taxed on the tax scale. However, despite the favorable attitude towards them in recent years (reduction of the minimum rate from 22% to 9% on the first 10,000 euros of income, the abolition of the solidarity collection, the abolition of the claim fee in exchange for job creation and the exclusion of insurance premiums from declared income) , their declared incomes did not have a corresponding increase. At least something like that was not reflected in the tax returns for last year and whether it will be reflected this year, time will tell. All self-employed declare incomes of 3.5-4 billion, while more than half of personal companies (OE and EE) show losses over a number of years. Returning to the “target” to be encouraged through a series of interventions to contribute more to the country’s overall tax burden is a possible post-election possibility. Now, since 2023, the following “phenomenon” is being created: after its increase minimal salary at 780 euros gross, there will not be a single full-time employee who would not pay personal income tax (in the form of withholding), and about half of the self-employed (about 250,000 out of a total of 650,000) will not pay a single euro of tax precisely because they report loss on a permanent basis.

The tax treatment of dividends has already been at the center of the pre-election debate. The current government has cut the rate to 5%, a move recently criticized by former Economy Minister Yannis Dragasakis.