Greek Gov’s New Measures Fail to Tackle Soaring Prices

Government measures announced at this year’s Thessaloniki International Fair (ΔΕΘ) have sparked concern, as analysts consider them inadequate to address the daily struggles caused by persistent inflation and shrinking purchasing power.

The package was promoted as relief for the middle class, families, young people, and pensioners. It includes lower income tax, zero tax for workers under 25, family-related benefits, and the abolition of ENFIA (property tax) in small villages.

Tax Cuts with Limited Impact
The main intervention targets lower- and middle-income earners. Tax on annual income up to €20,000 will drop from 22% to 20%, offering families with two children savings of around €600 a year. For a family of four with the same income, the relief could reach €1,680. Workers under 25 will pay no income tax, with partial benefits extending to those up to 30.

However, most young workers are employed part-time or earn below the taxable threshold. As a result, the measure brings little real benefit to those at the lowest income levels.

On ENFIA, the government pledged a 50% cut in 2026 for small villages, with full abolition in 2027. Yet no parallel measures were announced for urban centers, where housing costs and rents are rising most sharply. Pensioners also remain without immediate support, as the long-discussed elimination of the “personal difference” in pensions has been delayed to 2026–2027, while higher costs in medicines and healthcare continue to absorb much of their income.

Inflation Boosting State Revenues
Data highlights a growing mismatch between household strain and state revenues. VAT income is expected to rise to €26.7 billion in 2025, up from €25.3 billion in 2024 and €17.7 billion in 2019—an increase of 43% over six years. VAT revenue now equals 11% of GDP, far above the EU average of 7.5%. Indirect taxes overall (VAT and excise duties) account for 17.3% of GDP, the fourth-highest rate in the EU, compared with an average of 13%.

This suggests the state is benefiting from inflation while households see their disposable income decline.

According to Eurostat, food inflation in Greece stood at 6% in July 2025, while rents in Athens rose 9% year-on-year. With the minimum wage at €830, the modest tax savings of €200–600 are quickly offset by higher food and housing costs.

Family Support Missing Beyond Taxes
The government’s rhetoric of “supporting families” was limited to tax measures. No commitments were made for childcare, housing assistance, or improving work-life balance. Instead, policy changes are moving toward longer working hours—up to 13 hours per day—while in other European countries, the trend is the opposite. Spain is debating a reduction to a 37.5-hour workweek, and France maintains a 35-hour limit.

The message from Thessaloniki is clear: Greek families are being asked to rely solely on limited tax relief while daily life grows increasingly difficult.