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One of the first steps of the new socialist government in Greece will be to apply shock-therapy on Greek economy through taxes. Georgeos Papandreou’s office is working on a new tax-policy, aiming at reducing taxes for low-paid workers, while high-income receivers will have to pay significantly higher taxes. The common income tax of 25% is being replaced by a floating tax. The nontaxable minimum becomes €12 000 per year. Income between €12 000 and €20 000 will undergo 15% taxation. 25 per cent will pay those that receive between €20 000 and €30 000. The government believes that the reformation will result in the separate tax-payer payer paying €800 less taxes per year.

The economic team of the new government is leaving the option for the nontaxable minimum of €12 000 to be valid for freelance professions as well, warning that fines will jump for tax evasion. So, what’s happening to the taxes of the wealthy Greeks? An income tax of 35% will be applied on income between €30 000 and €60 000 per year; this percentage was until now active for income up to €75 000. For income above 60 000 the taxes will be 40% with the government discussing for it to reach 45%. Government experts believe that if rent-income is added to the salaries, more balanced distribution of the taxation will be present and more money will go in the treasury.

Another tax-system is being prepared for 2010 regarding real estate. No taxes will be paid on a first residence unless its tax assessment is above €500 000. An increase of the nontaxable minimum will occur in the legacy-duties as well- close to €300 000, and for larger amounts taxes are respectively applied. Taxes will be also significantly increased in the independently-assessed professions– sportsman/women, tax-agents, custom officers, doctors, local authority figures. Shareholders’ and other financial investors’ income taxes will also be subject to change, and the practice of returning taxes to those that declare low income will be abolished. It is believed that this way the transfer of shares to relatives or other persons, or subsidiaries in countries with more favorable tax systems, will be avoided.

In an interview for “Elefterotipia” the new Minister of Finance Georgeos Papakonstantinou stated that the purpose is to subject to taxation those that earn big, including the Greek Orthodox Church, as well as the off-shore companies.