Taxation has always been at the center of public debate, as every announcement of rate cuts raises expectations that citizens will finally get some real relief. The recent announcement of a two-percentage-point reduction has once again fueled the discussion around the key question: is this genuine support, or just another piece of political window dressing?

The reduction of tax rates

The announced reduction of tax rates by two percentage points sounds positive. And it is. Every tax cut is a welcome relief for citizens, especially at a time when disposable income is under pressure from all sides.

The issue of indirect taxation

However, the tax reality does not change only through rates. Citizens feel the burden mainly from indirect taxes: VAT, fuel, energy, basic goods. When supermarket prices keep rising, the benefit from an income tax cut almost disappears.

The role of VAT

It is worth being honest: VAT reductions rarely reach the end consumer. Businesses do not lower retail prices, so citizens do not feel the difference in their pockets. However, that does not mean they have no value.

Supporting small businesses

A radical VAT reduction – even for a five-year period – could work differently: it could strengthen small businesses, make them more competitive, give them room to grow, and encourage more accurate bookkeeping. In other words, VAT is not only a tool that puts pressure on citizens; it can also become a lever of support for small entrepreneurship.

Conclusion

The two-point reduction is correct and positive. However, if we want real change, what is needed is a comprehensive reform: simplification, a fairer distribution of the tax burden, and policies that simultaneously strengthen both citizens and businesses. Otherwise, we are left with a small relief that risks becoming… just another episode of tax-related fake news.

Nikos Karamanos

CFO | Co-Founder | Tax Advisor at AFS