The government is racing ahead with the drafting of the new tax bill to have as fast an impact as possible on simplifying the taxation system, lightening the burden on households and containing tax evasion.
At any rate, Athens will have to stick to the directions of the bailout agreement related to taxation, especially the measures aimed at reducing tax evasion, if it wants to have measures such as the reductions in corporate and value-added tax rates and the gradual lifting of the tax-free ceiling accepted by the country’s international creditors.
A special task force will start operating at the Finance Ministry on Monday. This group will comprise officials with in-depth knowledge of Greece’s tax laws who will process proposals that emerged from negotiations with various social groups in March and measures agreed by the coalition government.
The reform of the existing tax system is seen lasting for at least a decade, depending on the course of the economy.
The first measure will be to abolish tax exemptions and preferential status for various groups, to be replaced by targeted subsidies. Groups including families with four or more children and the disabled will have their additional tax exemptions abolished. The 10 percent reduction of the taxable income for those who pay rent, school fees, life insurance, medical treatment etc will also be scrapped. The tax-free ceiling will gradually be raised from 5,000 euros to 8,000 within three years.
The self-employed will be taxed according to objective criteria depending on profession, the level of their bank deposits, their professional expenditure and so on. A single tax rate of 20 percent will apply to all profit from rentals, deposit interest, bond interest and share sale capital gains. Corporate tax may drop from 20 percent today to 15 percent, while property taxes will be merged into one.
The food catering VAT rate will drop from 23 percent to 13 percent, resulting in an immediate drop in related prices, in a bid to boost tourism. General VAT brackets will later switch from 23 to 19 percent, from 13 to 9 percent and from 6.5 to 5 percent.
Finally, an electronic property register will be created, with over 8.5 million taxpayers asked for the first time to declare all their properties and then update the records every year.