ATHENS, Greece (AP) — Greek Prime Minister Kyriakos Mitsotakis unveiled a 1.6 billion-euro ($1.87 billion) tax cuts package Saturday that includes a number of reductions affecting some 4 million citizens. He announced the package in a keynote speech at the Thessaloniki International Fair.

The head of Greece’s government traditionally outlines the following year’s economic policies at the fair every September, while touting their achievements.

At last year’s speech, Mitsotakis had declared “I have not come with a bag full of gifts.”

This year’s speech was mostly about gifts designed to boost as many incomes as possible. Mitsotakis himself put the beneficiaries — the middle class, the young, large families, pensioners and others — at around 4 million.

This was not a pork barrel fest, yet it was clear that Mitsotakis was speaking with the next national election in mind. The election must take place by July 2027.

The tax-cut package was limited by spending constraints imposed by the EU, but financed by better-than-expected tax revenue and a primary budget surplus, which excludes debt servicing.

The tax cuts will be incorporated in the 2026 national budget, which will be voted on by Parliament in December.

Other than the lowest tax bracket, 9%, and the top rate of 44%, all other tax rates will be cut by 2 percentage points — more for families, especially those with three or more children. A new 39% rate will be imposed on incomes from 40-60,000 euros ($46,800 – $70,200) that now pay the top rate.

Young people under 25 making under 20,000 euros ($23,400) per year will pay no tax and those between 25 and 30 will pay a much reduced tax. Income earners from rents will also pay significantly less, although Mitsotakis noted the incomes they declare from that source are almost absurdly low. Residents of small islands — under 20,000 population — will pay 30% less in value added tax, while village residents will see property taxes much reduced over the next two years.

Steps also will be taken to reduce housing shortages, partly by building apartments on former army bases.

Wage earners and pensioners should see these changes reflected in their January 2026 pay slips.

The aim of the tax cuts is twofold: raise disposable incomes amid persistent inflation, especially in foodstuffs, and by favoring families, deal with the country’s severe demographic problem. At 1.4 children per woman, the birthrate is well below the replacement level of 2.1. At this rate, the population will drop from a current 10.2 million to well under 8 million by 2050. In 2021, the median age of 44.7 was the seventh highest globally.

Mitsotakis noted that Greece remains committed to fiscal stability at a time of global turbulence where “tariff wars shake whole economies.”

As happens every year, there were three separate protests, one by unions, one by a pro-Communist union and one by the extreme left. They were almost entirely peaceful, although participants rose from a low of under 7,500 in 2024 to over 16,000, according to police. Besides anti-government slogans, there were also many in support of the Palestinians.

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Associated Press writer Costas Kantouris contributed to this report from Thessaloniki.