The yearly tax discount will be reduced by 650 euros as of 2020, according to a draft agreement submitted to the government by the European Commission and the International Monetary Fund. The tax-free basis will be lowered from €8,636 currently to €5,685. In simple words this means: taxed will be the poor, those low-incomers of 406-473 euro per month, people who can hardly make a living anyway.
Taking into consideration that the European Union considers as poverty line annual income at 6,000 euros, it is a scandal to demand taxing the poor.
The measure refers to employees and pensioners as self-employed and freelancers are taxed from the first euro.
But it was obvious that the International Monetary Fund would demand such taxation as wages dramatically dropped in the last years of the economic crisis of bailout agreements and austerity measures.
Excerpt of the EU Commission and IMF drafts sent to Greek government before negotiations assumed on Tuesday. Document obtained by Kathimerini daily.
The 650-euro cut to the discount will be across the board, according to the draft agreement [by the European Commission and the IMF], meaning it will apply to all taxpayers regardless of family status.
Therefore, for an unmarried taxpayer, the tax discount will drop from 1,900 euros today to 1,250 euros, which means the tax-free threshold will sink from 8,636 to 5,685 euros. Taxpayers with three or more children will see their discount shrink from 2,100 to 1,450 euros and their tax-free threshold from 9,545 to 6,595 euros.
The measure will weigh particularly heavily on those on lower incomes up to 10,000 euros per year, who today pay no income tax at all. The blow will be somewhat softened, mainly for people on incomes of above 15,000-20,000 euros, if the so-called countermeasures are implemented as they would include the drop of the basic income tax rate from 22 percent to 20 percent and of the lowest solidarity levy rate.
The proposed reduction to the income tax discount as well as the cuts to pensions that will apply from 2019 have already been agreed by the government and the country’s creditors and no substantial changes are anticipated in the context of the negotiations.
The daily notes further that:
If the cuts to the so-called personal difference in pensions – i.e. the leveling down of all pensions, old and new, to the amount calculated by last year’s legislation – do not fetch the anticipated savings for 2019, the reduction of the tax discount will be partially implemented from 2019 to cover the fiscal gap created.
Also, Eurogroup head Jeroen Dijsselbloem said that the implementation of lowering the tax-free basis in 2019 at the plenary of the European Parliament earlier today.
It was obvious that the International Monetary Fund would demand taxation of the low-incomers as wages dramatically dropped in the last years of the economic crisis of bailout agreements and austerity measures.
The hypocrisy of the IMF and the European creditors is beyond words. The IMF had claimed a couple of months ago, that over taxation was not a solution for the Greek problem. The IMF had obviously corporate and business tax in mind.
European commission president Jean-Claude Juncker claimed yesterday he was against further cuts in pensions. Apparently he has no idea about the content of the documents leaving his office.
I wonder, how ruling left-wing SYRIZA will convince its lawmakers to vote in favor of such measures that will crash millions of people. Prime Minister Alexis Tsipras said recently the additional austerity measures will be legislated mid May.
PS Taxing the poor? Does Juncker or the IMF have any idea how an unmarried taxpayer manages to survive on less than 500 euro per month or a family with two kids on hardly above 500 in a state with no welfare? Frankly, my dear, I am sure, they don’t give a damn.