On 7/9, Greek Prime Minister Kyriakos Mitsotakis announced a 1.6 billion euro (over $1.8 billion USD) tax cut package designed to boost the country’s population. “We understand the financial burdens faced by those who choose not to have children, or those who have two or three. We believe it’s necessary to reward citizens who choose to have more children,” he said.

The plan, funded by budget surpluses from the economic recovery, will be implemented from 2026. It includes a 2 percentage point income tax reduction across all brackets and a 0% tax rate for low-income families with 4 or more children. Certain property taxes will also be waived for residents of villages with fewer than 1,500 inhabitants.

Mitsotakis called it the most ambitious tax reform in over 50 years, focused on supporting larger families and encouraging young people to live in rural areas.

Greek Prime Minister Kyriakos Mitsotakis speaks in Thessaloniki on 7/9. Photo: AFP

Greek Prime Minister Kyriakos Mitsotakis speaks in Thessaloniki on 7/9. Photo: AFP

Greece faces a serious challenge with an aging population and a low birth rate of just 1.4 children per woman, far below the 2.1 needed to maintain the population. In 2021, Greece had the 7th highest median age globally at 44.7 years old.

Eurostat, the statistical office of the European Commission (EC), projects Greece's population will fall from 10.2 million to under 8 million by 2050, with approximately 36% of the population over 65.

Finance Minister Kyriakos Pierrakakis stated that the birth rate has halved since the financial crisis 15 years ago. He emphasized that addressing the demographic crisis is a top priority in economic policy.

Previous government incentives, including support from 1,700 euros for the first child to 3,500 euros for the fourth, along with a monthly allowance of up to 140 euros per child, have been insufficient to reverse the declining population trend. High living costs and low wages compared to other European countries are key factors.

The declining number of children has led the Ministry of Education to close over 700 schools nationwide. Soaring housing costs prevent many young people from buying or renting homes, forcing them to live with their parents into their 30s, contributing to lower marriage and birth rates.

The government has pledged to build more affordable housing on abandoned military land and eliminate property taxes in remote areas to encourage young people to return to rural life.

Studies suggest that Greece's demographic crisis stems from the near-decade long debt crisis, which drove hundreds of thousands of young people to leave the country in search of work.

The Lancet medical journal warns that the large-scale demographic shift threatens Greece's healthcare system, labor market, and national security. The government hopes the new policy package will reverse the population decline and strengthen the social security system in the face of growing pressures.

Thanh Danh (Guardian, Financial Times, ABC)