Greek Prime Minister Unveils Major Income Tax Reforms and Wage Increases Ahead of 2025 Elections
Key Announcements and Economic Context
Overview of Tax Breaks and Wage Increases
ATHENS, Sept 5 - Greek Prime Minister Kyriakos Mitsotakis announced income tax breaks and wage increases for workers, pensioners and the self-employed on Saturday as part of a tax reform worth billions of euros ahead of elections next year.
Details of the Tax Reform Package
The measures, with a cost of €2.2 billion for 2027, equal to about one percent of GDP, include an annual bonus of €400 for pensioners and €500 for public servants, zero income tax for low income farmers and low income families with three children and a reduction of the advance tax payment for self-employed and small businesses.
Political and Economic Background
Government's Standing and Public Perception
His center-right government, which was re-elected with 40.5% of the vote in 2023 promising to increase incomes, remains ahead in opinion polls but has seen its support slip to below 30% amid a protracted cost-of-living crisis and claims of corruption.
Greece's Economic Recovery
Performance in the Euro Zone
After a financial crisis in 2009 that triggered fears Greece would crash out of the euro zone, the country is now one of the best-performing in Europe. Greece's economy is expanding at an annual rate of 2%, outpacing the euro zone average. It expects a primary surplus worth about 4% of gross domestic product this year, almost double its initial forecast, giving the necessary fiscal space to fund the new measures.
Additional Measures Announced
Minimum Salary and Pension Contributions
Mitsotakis also announced a new hike in the minimum salary to €950 on a monthly basis and to €1,000 in 2028 and also a reduction of 0.5% for pension contributions.
(Reporting by Lefteris Papadimas, Editing by Timothy Heritage and Toby Chopra)
