Greece’s government has announced the details of a new property tax, which it said it must introduce to qualify for a sorely needed 8 billion euros loan tranche by plugging a 2 billion euros budget shortfall.
Announcing the new tax after an emergency cabinet meeting last Sunday morning, finance minister Evangelos Venizelos said his government had no option but to do “everything necessary” to cover the budget shortfall, following a deeper-than-expected recession.
Forecasting that the next two months would be “hellish” for the Greek people, Mr Venizelos said the revenue shortfalls threatened the country’s vital international bailout program.
He added that, along with efforts announced last week to reduce the size of the country’s public sector, the new measures would boost lagging revenue by 2 billion euros, or about 1 per cent of annual gross domestic product.
The new property tax will see property owners pay 50 cents to 10 euros per square metre according to the value of the property, with the total amount payable being calculated according to various social criteria, such as the owner’s income and the size of his or her family.
On average, property owners can expect to pay 4 euros per square metre of built surface.
The government opted to include the tax in electricity bills because they contain data on both the size of apartments and their age.
The tax will be levied on all buildings with an electricity supply, whether residential or holiday homes, but low-population areas may be exempted. Industrial installations and hotels might also be exempted but shops will have to pay.
Those liable to pay the tax will be property owners and not tenants. The unemployed and low-paid pensioners will be exempted, while low-income families on the so-called social electricity tariff will be subject to the lowest rate.
Sunday’s announcement of the new blanket property tax, which has been condemned vociferously by all of Greece’s opposition parties, has severely undermined the fragile credibility of Prime Minister George Papandreou, who, in a keynote address delivered on Saturday evening at the country’s major international trade fair in Thessaloniki, gave no indication that the new surtax was on its way.
In his speech, Mr Papandreou said that, in an effort to tackle unemployment, his government would soon begin distributing 100,000 hectares of land to young people who wanted to become farmers. He also pledged to boost investment in tourism and solar power development.
The fair was accompanied by extensive rioting on the streets of the northern port city, as some 25,000 people attended an anti-austerity protest.