ECONOMY

Troika to ask for spending cuts to offset property tax lightening

The representatives of Greece’s international creditors – known as the troika – are asking for measures on the expenditure front in order to accept the revised plan by the Finance Ministry for the taxation of properties.

The ministry is proposing the reduction of taxes to be imposed on property from 2014 from 4.15 billion to 3.5 billion euros, with the troika said to be ready to discuss that if the government can provide details of a 650-million-euro reduction in spending.

The latest plan includes interventions in the rates of the new Single Property Tax for plots within town planning, and a reduction in the rates for farm buildings and for supplementary spaces in homes such as storage rooms or garages, so that they are not taxed at the same rate as actual living areas.

The original plan was for 20 tax brackets for plots inside town-planning zones ranging from 0.40 euros per square meter to 4 euros/sq.m., but these rates are about to be reduced according to the revised plan.

Furthermore, the ministry is proposing a 20 percent tax discount (using a 0.8 percent rate instead of 1 percent) for buildings aged 50 years or over, so as to reduce the burden on the owners of old houses.

Everything will depend on the talks with the heads of the troika, which started on Sunday. The negotiations on the new tax will focus on the final rates for the tax that will replace the special tax paid via electricity bills for the last time this year as well as the FAP property tax.

The Finance Ministry will attempt to convince the country’s creditors that 81.5 percent of taxes owed will be collected, against the 67 percent that the troika has anticipated in its reports.

Should the troika accept this figure, the total amount in tax to be imposed will go down to 3.5 billion euros, with the intention of collecting at least 2.8 billion euros.

However the troika will still ask for ready proposals concerning measures that will reduce public spending by 650 million euros in case the ministry’s plan does not prove successful.