Surplus revenue thanks to measures to crack down on tax evasion will be directed toward tax cuts to provide relief to low and middle-income earners and reduce social insurance costs for workers and businesses.
The tax policy planned by the government for the coming years will be driven in this direction based on additional revenues of 4 billion euros expected to be collected from taxes until 2027, according to the estimates.
The predictions of the Medium-Term Programme presented by Finance Minister Kostis Hatzidakis reflect the scope of the fiscal space created by the policy of combating tax evasion. It now yields significant revenue surpluses for public funds, which are estimated to reach 2.5 billion euros in 2027. This fiscal space, according to the plan drawn up by the economic staff, is expected to be utilised for interventions that will unfold over the next three years and will involve the reduction of income tax rates, as well as the further reduction of contributions for employees and businesses. The finance minister has made it clear that the reduction of indirect taxes is an ineffective way, both to limit the tax burden and to deal with high prices, because after all, neither the taxpayers nor the consumers benefit from it. That is why it is not expected that there will be interventions in this area.
According to sources, the intentions of the financial staff are to reduce tax rates, which will mainly concern middle incomes.
Regarding the reduction of contributions, Prime Minister Kyriakos Mitsotakis announced at the Thessaloniki International Fair (TIF) that they will be reduced by one percentage point from 1.1.2025, twice as much as previously announced. Also, a further reduction of 0.5% has been announced from 2027. The expanded fiscal space also creates scope for new interventions on this front in order to further reduce non-salary costs for businesses and insurance costs for employees. The policy of reducing contributions, in addition to the direct benefits it has for businesses and employees, also has indirect effects since it creates room for businesses in the private sector to increase the wages of employees.
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