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Greek Tax Reform Plan Approved

by Lorys Charalambous,, Cyprus

09 May 2016

The Greek parliament has approved a package of new tax reforms designed to secure additional funding from Greece's bailout creditors to meet upcoming debt repayments.

The proposals were approved by Parliament on May 8 in a 153-144 vote following two days of intensive negotiations. Broadly, they include increases in personal income tax for high-income earners and the solidarity tax on personal incomes, changes to social security contributions, and the introduction of a new "national pension," worth EUR384 (USD438) per month after employment of at least 20 years.

According to Prime Minister Alexis Tsipras, the income tax and social security tax measures will benefit the majority of taxpayers on low- and middle-incomes.

A second set of tax measures being requested by the International Monetary Fund, but not yet agreed by the Greek Parliament, could also see taxes rise on fuel, tobacco, broadband subscriptions, and hotel accommodation.

Greece has already agreed to raise its value-added tax rate to 24 percent from July 1, 2016. The hike will push Greece's headline rate closer to the highest value-added tax rate in the European Union, that of Hungary's, at 25 percent. It is anticipated that the hike will boost Greece's revenues by about half a billion euros.

TAGS: tax | pensions | value added tax (VAT) | social security | Greece | tax reform | individual income tax | Europe

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