self employed, widowed pensioners, beneficiaries child benefitas well as other social benefits, as well as those that have small and medium-sized “energy-intensive” enterprises are at risk of facing burdens and reductions in disposable income.
The risk of burdens for these social groups forces the government to seek solutions that limit the… damage to citizens, but without affecting the country’s fiscal performance.
It is important to note here that the deadline for submitting tax returns ends on Friday and now everyone will have their tax returns in their hands.
Unpleasant surprises
The most unpleasant surprises, in a year that is already closing with a record tax declaration (it has already broken the 4 billion euro barrier for debt settlement and while at least 400 thousand declarations remain), concern self-employed workers, who are asked to pay double or triple the amounts compared to last year.
The problem is that the tax for those who end up being taxed based on the presumed minimum income will also increase next year, as the minimum amount is linked to the minimum wage, which was increased in April and will also affect income tax for the following year.
The increase in taxable income is also the reason why several tens of thousands of people will lose child benefits or other social benefits this year, further reducing disposable income.
In the ranks of pensioners, the focus is on widowed pensioners who, at the same time, receive a pension in their own right.
For them – estimated to be at least 60 thousand – the decision to cut one of the two pensions is pending (the cut has already been made for State pensioners and is also pending for private sector pensioners).
Furthermore, the “threats” of the period include electricity prices. The drop in wholesale prices over the last 24 hours, the announcement of the government subsidy, but also the expression of the intention of market players to absorb the costs, create hope in families that the burden will not be great.
For professionals, however, the concern remains and all that has been announced is that there will be no need to return the money that was given during the energy crisis in the form of deferrals.
The “fronts”
The government’s plans for these “fronts” of citizen discontent are as follows:
1.For the self-employed, The Ministry of Finance is awaiting the completion of the tax return submission process so that a thorough analysis of the findings can be carried out.
The first objective is to identify potential pockets of very large burdens, which even endanger the operation of individual companies. There is always the “tax evasion” factor that can limit taxable profits to very low levels, but there is also the “bad financial year” factor.
Possible changes to the law to limit extreme charges will be decided in the autumn.
Furthermore, for the expected increase in the tax burden (given that the income is linked to the minimum wage) the government will propose as a “counterweight” the abolition of the claim tax, which is equivalent to a financial benefit of 325 euros for everyone and not just for those who are taxed on the minimum income.
In fact, in many cases, this relief will offset the loss resulting from the increase in taxable income.
For example, if someone has a presumed income of €14,000 and this increases by 6.5% to the minimum wage, there will be an additional taxable income of €900, which at a rate of 22% will result in a tax bill of €197, i.e. less than the benefit of removing the claim rate. Of course, professionals will also have to deal with increasing insurance contributions at a rate corresponding to inflation.
two. For retirees an attempt is being made to combine the reduction in widows’ pensions with other measures (e.g. a change in the solidarity contribution) so that there is no major burden.
Furthermore, if there is a retroactive reduction, the possibility of paying the difference over time is being discussed, so that there is no sudden reduction in income. This is a critical issue for the 60,000 pensioners who belong to this category (two main pensions, one for a widow and one in their own right), since the fact that a corresponding reduction has already been made for other pensioners (from the State) does not allow the outstanding amount to remain at the bottom of the time.
3. In front of electricity In the last 24 hours, hopes of a “recovery” in the situation have increased.
The drop in wholesale prices to below €100 may not prevent the large monthly increase, but it does give the impression that the turbulence may have been temporary after all. With the subsidies – which may ultimately be smaller than initially seen – consumers will avoid high charges on their bills.
However, where there will be a problem is for companies, especially small and medium-sized ones, that have not “blocked” their invoices.