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Tax squeeze on homeowners
Athens 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 been envisioned.

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 (ETAK).

"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 November 24.

"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 said.

"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.

Saturday June 24, 2017
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