The World Bank – and not the International Monetary Fund – is bringing back to the negotiating table with the country’s creditors the reduction of the income tax-free threshold to 5,000 euros per year in the context of welfare benefit restructuring.
In its efforts to reach a compromise with the creditors for the completion of the second bailout review, the government is examining a scenario whereby the automatic fiscal mechanism agreed last year (aka “the cutter”) would also include the reduction of the tax-free threshold and pensions.
The reduction in the income tax discount from next year should now be seen as a certainty, and it is destined to hurt most taxpayers, above all those in the lower income brackets. Changes in tax brackets and rates is also quite likely, as the creditors are insisting on changes there as well.
Prime Minister Alexis Tsipras said investor trust in the Greek economy is returning as the country’s asset-sales fund announced the privatization of the port of Piraeus. “I believe 2016 will be the year that Greece will surprise the world economic community,” Tsipras said in an interview with Bloomberg Television in Davos Wednesday.