U-turn on ENFIA and threshold

After its pre-election pledge to raise the minimum salary to 751 euros per month, two more of the government’s promises have now been postponed for 2016: the abolition of the Single Property Tax (ENFIA), which will continue this year as it was in 2014, and the increase in the income tax-free threshold to 12,000 euros per year, which won’t happen until next year.

Prime Minister Alexis Tsipras said in a televised interview late on Monday that “abolishing ENFIA and raising the tax-free threshold depend on the course of the economy and the capacity we will have to meet our targets. Otherwise they will be put off till 2016.”

Given the poor performance of the fiscal figures, it is virtually impossible for ENFIA and the Supplementary Property Tax to be replaced by the Large Property Tax (FMAP) that governing SYRIZA had promised before the January election.

It also remains unknown whether ENFIA will be calculated according to the old objective values (property rates used for tax purposes) or the new ones that are currently being drafted by a Finance Ministry committee. Questioned on the subject, a ministry official said the adjustment of the objective values will happen in stages so that there won’t be a a dramatic shift in tax collection results.

Consequently, the government is still aiming for total revenues of 2.65 billion euros from ENFIA this year, just as the previous government had done last year, a tax that State Minister Nikos Pappas had only recently characterized as “unjust,” saying it would not be collected in 2015.

Besides putting off raising the tax-free threshold, the government is also examining the idea of hiking the top income tax rate from 42 to 45 percent, and increasing the extraordinary solidarity tax for taxpayers with annual incomes of at least 50,000 euros. It is possible the rate will revert to the level it was in 2013, as in 2014 there was a 30 percent discount introduced on all solidarity tax rates.

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