New Democracy Bill Will Cut ENFIA Property Tax 20 Percent

FILE - Prime Minister Kyriakos Mitsotakis on Saturday during the policy statements in Parliament. (Photo by Eurokinissi/Yorgos Kontarinis)

ATHENS – Keeping his vow, new Prime Minister and New Democracy leader Kyriakos Mitsotakis’ government is planning to cut the hated ENFIA property tax surcharge by 20 percent, a mostly unfulfilled promise by the previous ruling Radical Left SYRIZA.

The tax was put into effect during Greece’s now 9/1-year-long economic crisis and former Premier Alexis Tsipras walked back his pledge to eliminate it and then kept and increased it under orders from the country’s European creditors.

He moved to cut it as well during the waning days of his administration just before he was bounced out in July 7 snap elections New Democracy, the party he had unseated in January 2015 when it was led by then-Premier Antonis Samaras.

The total cost of the cut has been estimated by Finance Ministry experts at around 565 million euros ($634.59 million,) said Kathimerini, with 265 million euro ($297.69 million) already set aside in this year’s budget by the SYRIZA government.

The bill will end the SYRIZA-introduced provision that was designed to cut the ENFIA by 10 percent but only for those who owned properties up to 200,000 euros ($224,670), leaving The New Democracy plan would cut 20 percent for all property owners in their entirety in 2019. The reduction in 2020 will be 10 percent. It will be part of a mini-tax bill going to Parliament in August.

The government also plans to cut to 24 percent the corporate rate that was raised by Tsipras to 29 percent as part of an avalanche of tax hikes and new taxes to satisfy the country’s creditors, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM).

That was part of the memorandum Tsiporas signed in the summer of 2015 to get Greece a third bailout, this one for 86 billion euros ($96.61 billion) that he said he would never seek nor accept but did both.

The high corporate rate, along with elements in SYRIZA trying to keep out foreign businesses, had scared off foreign investors Tsipras said were crucial but as his government simultaneously stymied them.

The proposed cuts in the property and corporate taxes so far have not met objections from the Troika, whose envoys will monitor Greece’s economic progress for decades to make sure fiscal targets are hit, otherwise automatic spending cuts would be triggered.

The same bill will include changes to the 120-installment scheme for settling debts in taxes and social security contributions to make it more attractive, the paper said, likely allowing businesses with up to one million euros ($1.12 million) owed the state to take part.

But Mitsotakis won’t be getting a break from fellow center-right leader German Chancellor Angela Merkel who said her government – German banks put up the bulk of the bailouts – won’t let Greece get a “discount” on its debt owed the lenders.

She told reporters her government will keep a wary eye on Mitsotakis’ plans, said the Greek business newspaper Naftemporiki.

“We’ll have to see what developments will arise,” she said, while calling this past week’s successful issuance of a seven-year bond by the Greek state, with a yield of 1.9 percent, as “very positive,” as Greek is trying to make a full return to markets.

Both Merkel’s ruling CDU party and New Democracy (ND) are members of the center-right European People’s Party (EPP) grouping in the European Parliament.