Listen: Greece targets demographic crisis with band-aid tax relief

Greece has announced a sweeping €1.6 billion tax reform aimed at tackling what Prime Minister Kyriakos Mitsotakis calls one of the country’s greatest threats, the demographic crisis.

But are these measures enough to reverse Greece’s demographic decline and ease the cost of living or are they simply quick fixes to distract from soaring prices and corruption scandals?

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Long Story Short” hosted by Evi Kiorri. The podcast is available on all major platforms.

You can find the transcript here if you prefer reading:

Greece has announced a sweeping €1.6bn tax reform aimed at tackling what Prime Minister Kyriakos Mitsotakis calls one of the country’s greatest threats, the demographic crisis. But are these measures enough to reverse Greece’s demographic decline and ease the cost of living or are they simply quick fixes to distract from soaring prices and corruption scandals?

The government says it will roll out tax breaks and incentives for families starting in 2026. These include a two-point reduction in income tax across the board, a zero tax rate for low-income families with four children, and the abolition of property tax in small villages. Workers under 25 will also pay no income tax, and families could see annual savings of up to €1,600.

On paper, it sounds generous. But the context is sobering: fertility rates in Greece stand at 1.4 children per woman, well below the replacement level of 2.1. Eurostat projects that the population could fall from today’s 10.2m to under 8 million by 2050, with more than a third of Greeks over the age of 65.

The financial crisis that gutted the country between 2009 and 2018 is still echoing. More than a million mostly young Greeks have left the country over the past few years to find work abroad, like myself.

Wages remain among the lowest in the EU with many citizens doing double jobs, the cost of living, especially housing, continues to soar, corruption of politicians remains high with scandals appearing every few months. So, for the young, starting a family in those conditions isn’t a priority. And the education ministry has already closed over 700 schools because there simply aren’t enough pupils.

Now, at first glance, the tax relief seems like a reward for young people and families. But there is a catch: most young Greeks earn too little to benefit. If you’re working part-time on the minimum wage of €830 a month, a tax cut doesn’t exactly change your life when rent in Athens has gone up by 9 percent in a year, so it’s now 2/3rds of this salary and food prices have also gone up by 6 percent.

Meanwhile, indirect taxation, things like VAT, has ballooned. The state now collects more from everyday spending, meaning it profits from inflation while households feel poorer. Greece has one of the highest shares of indirect taxes in the EU, at over 17 percent of GDP.

So the government says it’s helping families, but many argue it’s tinkering with the tax code instead of addressing the real barriers which remain unaffordable housing, lack of childcare, and jobs that don’t pay enough to start a family. And when working hours are being extended to 13 a day, yes, Greece is the only country with officially 13 hour working days, it’s hard to believe the government is serious about improving work–life balance.

So, what is the future holding for the Greeks?

Well, the government insists this is the boldest tax reform in 50 years, financed by a rare fiscal surplus. But all this won’t be in place until 2026, and that’s an eternity for families already struggling. By then, maybe more schools will  close, definitely more young Greeks will migrate and the demographic time bomb, as Finance Minister Kyriakos Pierrakakis warns, will be ticking even louder.

But Greeks already know by now that all these measures won’t change their lives for the better, and that these measures are just a political band-aid ahead of the upcoming elections in 2027, as protests over wages, political corruption, and the deadly train crash of Tempe continue to dent the government’s credibility.