Government must decide by May when to lower tax-free income ceiling

Within the month of April, the government will be called upon to decide how to deal with the ENFIA real estate tax.

The commitments that it has agreed to with creditors provide that the necessary adjustments in real estate taxes must not derail the target of collecting 2.65bn euros.

Along with the ENFIA issue, the moment of truth is approaching regarding the tax-free income limit.

Here, the critical turning point is May, because if it turns out that the primary surplus is not on target, parliament will have to pass a law that the lowering of the tax-free ceiling must come into effect as of 1 January, 2019.

The updated memorandum, as the daily Ta Nea reports, states that in May, 2018, the government will have to lower the tax-free amount as of 2019 – instead of in 2020, as initially agreed – if the IMF, in cooperation with European institutions and Greek authorities, judges that the measure must be implemented earlier, in order to reach the target of a 3.5 percent primary surplus in 2019, without measures that will hinder economic growth.

That means right away that workers will lose the equivalent of a month’s salary, while retirees will lose the equivalent of three monthly pensions, due to the combination of the 2019 pension cuts (which amount to 18 percent) that have already been legislated, and the reduction in the amount of tax-free income.

With an earlier reduction of the tax-free income limit by 3,000 euros, about one million low-income taxpayers, with an annual income of between 5,600-9,000 euros, who today who pay almost no taxes or no taxes at all, will for the first time have to pay income tax.

About 2.7 million pensioners will face a double whammy, of pension cuts and a lowering of their tax-free income, which will lead to 650 euros in additional taxes.

Low income brackets, meaning taxpayers who earn 500-600 euros monthly, will lose the equivalent of up to one month’s salary a year, due to the tax-free income changes.

For retirees who have been pensioners for a longer period, the scheduled pension cuts will be up to 25 percent, as they will also lose benefits for spouses and children,

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