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Absurd overtaxation: Low-incomers, unemployed taxed 3 times their income

Thousands of unemployed taxpayers with no income at all or very low one have been called to pay disproportionately high taxes between 2,000-4,500 euro. Why this? Blame the so-called deemed income criteria that calculate a fictitious tax according to living conditions and not real income.

The absurdity of this taxation measure goes back to an IMF inspired taxation law of 2013 according to which a taxpayer needs X amount per year in order to maintain a residence (whether owned or rented) and a car as wells as another X amount for personal needs incl food.

Taxpayers with income below the poverty line, with income even lower than the tax-free allowance, were shocked to receive the tax office notices according to which they have to pay exorbitant taxes for … for what? For the tax office calculates taxes according to fictitious income criteria. In several cases the taxes are triple the amount they had earned in 2016.

In a report by daily Eleftheros Typos the following examples are more striking:

  1. Unemployed taxpayer who declared total income of 0.24 euro from interest had to pay €4,470.30 in taxes. He man lived in a 70sqmeter home that did not even belonged to him but to his mother. He owned a private car 1756cc.
  2. Taxpayer with total annual income €921 in 2016  – 600 euro from rent and 321 euro job payment has to pay €3,236.66 in taxes. His further assets a 27sqm first residence, a 1500cc private car.
  3. Married taxpayer with total income €2,750 from casual jobs, first residence 75sqm and private car 1500cc had to pay tax €2,284. The original tax was stated as €2,794 but 510 were deducted because this money was withheld as tax from his income with a rate of 20%.
  4. Unmarried, unemployed taxpayer with income €1,200 for rent and €480 from children benefit, a first resident of 80sqm and private car 1300cc had to pay €3,620.80 in taxes.

Reason for this unbelievable absurdity is that the services of the Independent Public Revenues did not tax the low-incomers as employed or pensioners but as self-employed and freelancers. To the real income tax with rate 22 % from the first euro, they added the deemed income criteria plus an amount of 100% tax in advance as required from the above mentioned category. The tax rate skyrocketed to 44%.

Employees and pensioners are subject to tax free income between 6,636 and 9,545 euros depending on marital status, number of children etc..

For the extreme example of the taxpayer with 0.24 euro income, the tax office calculated the deemed income as:

€3,000 annual expenses for living

€3,360 annual expense for home maintenance

€3,800 for annual car maintenance

Total deemed income: €10,160 + €0.24 = €10,159.76

Tax rate 22% from the first euro as self-employed/freelancer: 2,235.15 + 100% tax to be paid in advance = Total Tax  €4,470.30

Note: interests are taxed with 15% right before the deposit holder receives the money, and income from rent starts also with 15% tax rate for annual income up to 12,000 euro.

One can ask how can these people come along without income. There are several option like: taxed income/savings from workinheritage etc in the past, borrow, partner etc.

More on Deemed Income read also: Fiction means reality in surreal Greece: Deemed Income to tax also people without income , a KTG post from May 13, 2013.

Much to my first hand knowledge, Ireland refused to implement this unbelievable taxation law when it sought a bailout from the International Monetary Fund.

It is truly a disappointment that SYRIZA has not abolished this unfair law.

PS the word over-taxation got a new meaning

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