New year to bring fresh pressure
Additional hikes in taxes and social security contributions will eat further into people’s disposable incomes
Taxes and socialsecurity contributions will reach up to 75 percent of incomes during 2018, as more than 1.4 million freelance professionals, self-employed people and farmers will see their obligations increase, mainly due to the unfavorable shift in the way contributions are calculated.
For instance, a new professional who starts a business in 2018 and earns an annual income of 5,000 euros will have to pay the tax authorities and the Single Social Security Entity (EFKA) 3,750 euros, leaving him just 1,250 euros to live on.
If his income rises to 25,000 euros a year, the taxman and the social security fund will collect 50.61 percent. The more his income grows, the more his dues will increase, as for an annual income of 70,000 euros the state will claim 64.05 percent.
At the same time, salary workers, pensioners and property owners will also see their disposable income shrink further, due to the abolition of tax exemptions and the imposition of new taxes.
March 2018 will see the adjustment of the property rates used for tax purposes, known as objective values, which are set to radically change the way the Single Property Tax (ENFIA) is calculated due to the decision of the government and the country’s creditors for objective values to be in line with market prices.
That development will come as good news for people living in areas traditionally considered upmarket, such as Voula, Ekali and Psychico, which will see a drop in objective values as sale prices have slumped in recent years, but not for those at the other end of the scale, who can expect an increase. For example, the taxable values in the Piraeus districts of Drapetsona and Keratsini will jump 1.2010 from 700 euros per square meter today to some 1,000 euros/sq.m., which is also the minimum construction cost. In contrast, expensive areas are in for a reduction of some 30 percent or even up to 40 percent.
Unless there is a dramatic shift in ENFIA rates, property owners in neighborhoods such as Drapetsona will pay 30 percent more tax on their assets, although such areas have been the heartland of support for ruling party SYRIZA.