The World Today
Prime Minister Kyriakos Mitsotakis presented a €1.6 billion fiscal package that includes tax cuts and measures aimed at encouraging births and attracting people to less populated areas. The package, which the government describes as the most ambitious tax reform in recent decades, will take effect in 2026 and aims to ease the burden on households with children.
Among the most notable measures are a two-point reduction in several income tax brackets and the creation of tax breaks for low-income families with four or more children. Additionally, tax relief for young people and adjustments to the tax bracket structure are planned to ease pressure on the middle class.
The government also announced specific benefits for residents of rural areas and towns with fewer than 1,500 inhabitants, along with property tax exemptions in hard-to-reach areas to encourage young people to relocate and settle. The official intention is to combine tax incentives more affordable housing policies
Mitsotakis justified the measures by saying they needed to respond to a demographic crisis: Greece has a fertility rate of 1.4 children per woman and projections point to a sharp population decline by 2050 if the trend is not reversed. The figures, and the government's assessment of demographics as a risk to the economic future, were the focus of his speech.
The Finance Minister emphasized that fertility has halved since the start of the economic crisis and that the reform's priority is to reverse this phenomenon. Therefore, the package provides tax points and benefits that vary according to family composition. Economic analysts acknowledge that the measures alleviate immediate pressure, although they warn that the demographic response requires broader medium-term policies .
The announcement also included specific measures for young people and younger workers, with new reduced tax rates in certain brackets and benefits for entering the workforce, all with the aim of stemming the emigration of the younger population. The Executive links the possibility of implementing these measures to the improved tax revenue and growth observed in recent years.
The proposal sparked opposing reactions from critical sectors demanding a greater focus on wages and stable employment, and the political debate comes as the government faces a growing strain on public opinion. The ruling party, meanwhile, argues that the reform is sustainable and compatible with fiscal discipline, while civil society and the opposition are calling for more integrated housing and youth employment measures.
In practical terms, the impact will depend on the technical details established by the final regulations—exemption rates, limits, and conditions—and on the state's ability to transform tax incentives into real changes in fertility and settlement decisions. The year 2026 will be the first real test of the measure and, according to the government, will set the demographic and economic course for the next decade.
