Middle-class Greeks to fork out over 40% of annual salary in tax

Athens passed new tax increases to boost revenue by US$3 billion to keep in line with previous commitments to creditors. The new measures limit family benefits and force the middle class to pay over 40 per cent of their annual salary in taxes.

Greek’s Conservative-led coalition has passed the new tax increases to middle and high-income earners, self-employed and businesses.

The new law increases the amount of income tax paid by those earning more than US$26,000 a year, limits tax benefits for having children, revokes tax breaks for farmers and increases corporate tax to 26 per cent from 20 per cent.

It also increased top income tax rate to 42 per cent from 40 per cent for Greeks earning more than US$56,000 a year, which is the higher-end of middle class average in Greece.

The new law was part of an overall package approved past November in order to qualify Greece for more bailouts in the future. It aims to save Greece up to US$3 billion in 2013. If the new tax changes would not have been passed, then Greece would not qualify for more bailout money to be transferred and the nation would have fallen short of paying its own bills. Finance Minister Yannis Stournaras stated in the parliament that he had no other options and that the bill needed to be approved.

“Otherwise, we would have had to have saved that 2.3 billion euro [US$3 billion] through salary and pension cuts," he said. "But we are making the savings in a socially just fashion.”