Greece Readies Property Tax Change

ATHENS – Finance Minister Gikas Hardouvelis, admitting that the flawed new unified ENFIA property tax has led to wrong and prohibitive bills, said he’ll make changes to the measure after meeting with angry lawmakers from the ruling New Democracy Conservatives of Prime Minister Antonis Samaras and its partner the PASOK Socialists.

Sources told Kathimerini that Hardouvelis is set to change the way in which the ministry taxes agricultural holdings in some 4,000 areas for which there are no so-called objective values, which authorities use to calculate how much tax owners have to pay. Farmers are a key constituency of the ruling parties and were furious over the new bills.

There hasn’t been any word on whether taxpayers will still have to pay the bills although they’re wrong. It appears that the ministry will use two methods for calculating the tax, the current one and last year’s method.

A big part of the problem is that while property values have plummeted during a crushing economic crisis worsened by harsh austerity measures, taxes went up on them, a double whammy for taxpayers suffering big pay cuts, tax hikes, slashed pensions and unable to meet their obligations.

The method that produces the lowest tax burden in each case will be applied. It is estimated that this will lead to the owners of these plots of land paying a total of 167 million euros less in tax than they were originally asked to although it was not reported how the country’s international lenders would feel about it.

New Democracy lawmakers who met with Hardouvelis also said that he is considering applying a 25-30 percent discount on properties that are not being rented out and which do not have electricity. This would save taxpayers some 100 million euros. However, Finance Ministry sources were skeptical about whether the government will be able to make this concession.

The coalition is aiming to collect 2.4 billion euros from ENFIA, down from the 2.65 billion initially calculated. Folded into the bill is a property tax surcharge – which was supposed to be for one year but now is permanent.

That was imposed by a previous PASOK administration in which current Deputy Premier/Foreign Minister Evangelos Venizelos, now head of the Socialists and serving Samaras, was finance chief. He is now opposed to the tax he imposed.

The governmen now will reportedly grant six installments for payment instead of four although it still hasn’t been said whether that will be based on the wrong bills.

The government had been anxious not to extend payments into 2015 because they wouldn’t count toward 2014 revenues and Samaras is eager to please the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which has put up 240 billion euros ($327 billion) in two bailouts.

New Democracy MPs said they asked Hardouvelis to examine the possibility of providing even more installments for households who are having trouble paying.

It is expected that the government will next week submit to Parliament the amendment needed to be passed by MPs so the way ENFIA is levied can be changed.