Greek Prime Minister Announces Tax Reforms Amid Cost of Living Crisis

On September 6, 2025, Greek Prime Minister Kyriakos Mitsotakis unveiled a comprehensive tax reform package worth €1.6 billion ($1.87 billion) during his annual economic policy speech at the Thessaloniki International Fair. The reforms aim to alleviate the financial strain on households, particularly those with children, young workers, and retirees, amidst a prolonged cost of living crisis and declining public approval of his government. The measures include a two-point reduction in income tax rates across all brackets and a zero tax rate for low-income families with four children.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income ReformThe 10 Key Points from Mitsotakis’ Speech at the Thessaloniki International Fair – Youth, Demographics, and Reforms -Reuters89th TIF-Mitsotakis unveils tax relief measures to support citizensReuters

The tax reforms are designed to benefit over 4 million taxpayers and include several significant changes:

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform

• Income Tax Reductions: Tax rates for incomes between €10,000 and €20,000 will decrease from 22% to 18% for one child, 16% for two children, 9% for three children, and zero for families with four or more children. Young workers under 25 earning up to €20,000 will also be exempt from income tax.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform

• Pension Adjustments: The government plans to halve the transitional ‘personal difference’ in pensions by 2026 and eliminate it entirely by 2027, impacting approximately 671,000 retirees.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform

• Housing Initiatives: The construction of 2,000 apartments on unused public land is planned, with 25% allocated for military personnel and 75% for citizens without a first home. Additionally, property tax (ENFIA) will be halved in villages with populations under 1,500 by 2026 and abolished entirely by 2027.

The 10 Key Points from Mitsotakis’ Speech at the Thessaloniki International Fair – Youth, Demographics, and Reforms -

Mitsotakis's government has faced declining popularity, with opinion polls showing support for the New Democracy party dropping to 22-25% from 41% in the 2023 elections. This decline is attributed to rising food, housing, and energy prices, as well as ongoing corruption investigations. The Prime Minister emphasized that the reforms are part of a broader strategy to support middle-income earners and address demographic challenges, such as a declining birth rate.

Reuters

The opposition, particularly the Panhellenic Socialist Party (PASOK), criticized the tax reforms as insufficient. Spokesperson Kostas Tsoukalas described them as a partial refund rather than a genuine dividend of growth, arguing that they do not adequately address the heavy taxation citizens have faced in recent years. Tsoukalas highlighted the lack of inflation adjustments in tax brackets and accused the government of ignoring issues related to market concentration and rising prices.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform

Mitsotakis stated, “Fiscal stability is the foundation of our policy,” emphasizing that the government’s approach focuses on returning growth dividends to citizens through tax cuts rather than allowances. He reiterated his commitment to improving household income and ensuring national security, stating, “Our main priority is to support the citizens’ income as a buffer against high prices.”

The 10 Key Points from Mitsotakis’ Speech at the Thessaloniki International Fair – Youth, Demographics, and Reforms -

The tax reforms are set to take effect in 2026, with the government aiming to implement additional long-term reforms by 2030, including improvements in education, healthcare, urban planning, and energy autonomy. Mitsotakis ruled out a snap election, indicating his intention to serve until the end of his term in 2027, while also considering a potential third term.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform

• “We are all well aware that Greeks are struggling to make ends meet. Therefore our non-negotiable priority is to prop up their income,” — Kyriakos Mitsotakis, Prime Minister of Greece

Reuters

• “For us, who have to live the rest of our lives in this pain, the least we deserve is to know what happened,” — Maria Karystianou, Victim's Family Member

Reuters

While Mitsotakis's government presents the tax reforms as a significant relief measure, critics argue that they do not sufficiently address the underlying economic challenges faced by citizens. The opposition's claims regarding the inadequacy of the reforms highlight a gap in public perception versus government messaging.

Greece Rolls Out $1.9 Billion Tax Cuts in Landmark Income Reform