Greece Unveils €1.6B Tax Reform to Support Families & Middle Class

Photo:WAM

Greek Prime Minister Kyriakos Mitsotakis has announced a major change in the country’s tax system, aiming to help middle-class families who are still struggling after years of economic crisis. The new plan is worth €1.6 billion (around US$1.9 billion) and is considered one of the biggest income tax reforms in Greece in recent years.

In a speech outlining his government’s plans for the coming year, Mitsotakis said the reforms are designed to ease the burden on citizens dealing with high prices and stagnant wages. He highlighted that families, especially those with children, would benefit the most.

One of the key changes is for families with four or more children. These families will not have to pay any income tax on the first €20,000 of their annual income. This move is also intended to encourage more people to have children, as Greece has one of the lowest birth rates in Europe.

The reforms also include benefits for pensioners, better salaries for police and security staff, and tax breaks for diplomats. Other changes bring back some measures that were first introduced during Greece’s decade-long financial crisis.

Specific details of the tax changes include:

* Income Tax Cuts: Lower tax rates for most income brackets, especially those earning between €40,000 and €60,000.

* Youth Tax Relief: Workers under 25 years old earning up to €20,000 will be fully exempt from income tax.

* Rental Income: People earning income from rental properties will pay a reduced tax rate.

* Rural Property Tax: Residents in villages with up to 1,500 people will pay half the property tax in 2026, and no property tax from 2027 onwards.

* VAT Reduction for Islands: Value-added tax (VAT) will be reduced by 30% on islands with fewer than 20,000 people.

Mitsotakis emphasized that all changes are carefully planned to comply with European rules and obligations. He said these reforms are not only about saving money for citizens but also about improving living standards and supporting those most affected by rising prices.

These tax reforms aim to strengthen the middle class, support families, especially those with many children, and improve the financial situation for workers, young people, and pensioners. The government hopes that these measures will help Greece recover faster from years of economic difficulties while encouraging growth in rural areas and remote islands.

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Experts see this reform as a strategic move to boost the economy by increasing disposable income for families, encouraging spending, and supporting local businesses. By reducing taxes on certain income levels and offering exemptions, the government wants to create a fairer system where citizens feel less burdened by high costs of living.

This announcement comes at a time when many Greeks are struggling with inflation, rising energy costs, and limited salary growth. The reforms may also help slow down the population decline by offering financial incentives to larger families and making life more affordable in less populated areas.

In short, the Greek government’s €1.6 billion tax reform plan is a bold step to improve life for citizens, support families, ease financial pressures on pensioners, and stimulate economic growth in rural towns and islands. The plan balances immediate relief with long-term incentives for growth, reflecting the government’s commitment to tackling both social and economic challenges.