ECONOMY

Troika raises doubts over property tax

The representatives of Greece’s international creditors are set to extend their inspection in Athens beyond this week for four main reasons, these being the 2.1-billion-euro gap in the budgets for 2013 and 2014, delays in the privatizations program as well as in the restructuring of the public sector, and reservations regarding the application of the new property tax for 2014 as expressed in talks at the Finance Ministry on Tuesday.

The representatives of the European Commission, the European Central Bank and the International Monetary Fund – collectively known as the troika – will not return to Athens immediately after Thursday’s Eurogroup meeting in Luxembourg, but only when Greece has the answers ready to all of the open issues, likely next week.

On the new single property tax, the troika disputes the Finance Ministry’s forecast for revenues of 3.17 billion euros per year and is asking for a simpler tax system for properties, and an easier process to calculate the tax due. The creditors say that the complex system will prevent the collection of taxes due and have even proposed retaining the tax payment through electricity bills, which had been foreseen stopping after 2013.

Another major issue is the 1-billion-euro hole for this year and next stemming from the National Organization for Healthcare Provision (EOPYY). The gap for this year amounts to 500 million euros. The government is resisting the implementation of a levy on enterprises equal to 0.1 percent of their turnover, which would bring in a total of 600 million euros in 2013 and 2014. The troika says that if this is not applied, an alternative measure will be required, as that amount is necessary for the funding of the social security fund of the self-employed (OAEE).

Meanwhile, after processing research data, the ministry and the troika agreed on Tuesday that a reduction in the value-added tax on food servicing from 23 percent to 13 percent would entail a drop in state revenues of some 300 million euros per year. Although the troika disagrees with the argument that the VAT reduction will benefit the market, it said it would be willing to drop the measure provided the government comes up with an alternative plan to collect 300 million euros.