squeeze on homeowners
News, 27 November 2009
A decision by Finance Minister Yiorgos Papakonstantinou this week will
see even more homeowners levied with a one-off tax than had previously
The minister on November 20 said his government now plans to expand
the previously announced one-off social-solidarity levy by applying
it to properties with an objective value of 400,000 euros or more.
Previously, the limit had been 600,000 euros. The expanded levy will
be due by year end, along with the 2009 Unified Tax on Landed Property
"The one-off taxation on so-called large real- estate holdings is only
a pretext for the unprecedented fiscal persecution of middle-class
property, which is the kernel of the Greek people's savings," Stratos
Paradias, president of the Homeowners' Federation, told reporters on
"The well-known inability of fiscal authorities to track down tax dodgers
should never legitimise this sort of raid on honest taxpayers, with
sweeping measures such as the expected annual Large Property Tax (FMAP),
and the reinstitution of inheritance and parental donation taxes, or
the pre-announced increase in the objective real-estate values," Paradias
added, referring to Papakonstantinou's plans for tax reform, to be
unveiled in March.
The objective value refers to the registered worth of a property as
recorded by the town- planning authority and is usually lower than
the sale price of the property.
The finance minister formally tabled his final draft of the 2010 budget
in parliament on November 20, together with a government bill which
lowered the ceiling on what constitutes
"large landed property" - from the originally announced 600,000 euros
to 400,000 euros of objective real-estate asset values.
"The fiscal priority for 2010 is a significant reduction of the deficit
as a percentage of GDP while containing the growth of the public debt
which undermines the immediate and long term future of our country," Papakonstantinou
"It is our duty to preserve the country's standing vis-a-vis our European
partners and international markets," the minister said.
In his bid to address the European Commission's demands for fiscal
responsibility, the finance minister decided to cut the budget deficit
by 8.4 billion euros, from 12.7 percent of GDP this year to 9.1 percent
of GDP in 2010. Part of the savings, Papakonstantinou said, will be
achieved by making deeper cuts in government spending. The original
draft budget, unveiled earlier this month, provided for budget savings
of 1.6 billion euros. The latest draft now calls for a 2.2 billion
euro spending reduction in 2010.
Some 40,000 civil servants earning more than 2,000 euros a month will
get no raise in 2010. But the biggest share of the budgeted deficit
cut will come from an additional 3.6 billion euros in taxes from both
private incomes and real estate, in conjunction with raised levies
on alcohol and tobacco, to be announced by March.
Property tax made simple
Take the example of a bachelor who owns a flat worth 450,000 euros.
He will be liable for a large-property levy of 50 euros as he is taxed
at a rate of 0.1 percent on the portion of his property that covers
the difference between 400,000 and 450,000 euros, namely 50,000 euros.
Of course, the bachelor will also be liable for the 2009 ETAK. The
tax-free allowance for a bachelor is 100,000 euros, leaving a sum of
350,000 euros taxable by 0.1 percent. So the final bill for the sum
of the two taxes on his property will be 400 euros: 350 euros for ETAK
plus 50 euros for the one-off large- property levy. Similarly, a 1
million euro property will be taxed 1,200 euros; a 1.6 million euro
property will face a 3,900 euro levy; and an owner of a 2 million euro
property will get a bill for 6,300 euros.