Political cost fears lead to property tax changes

Political cost fears lead to property tax changes

The government has introduced changes to the calculation of the Single Property Tax (ENFIA), realizing that the political cost that would stem from the high levy imposed on owners this year would exceed the pecuniary benefits of its collection.

The Finance Ministry said on Monday that a supplementary tax (concerning owners with properties adding up to at least 200,000 euros in objective value) will not factor in farms after all and also that a clause abolishing discounts for a number of owners – and is currently in a bill in Parliament – will be withdrawn.

The ministry added that the ENFIA will be paid in five tranches this year, starting in September and ending in January 2017.

Ruling SYRIZA has suffered from internal unrest on the issue, as several deputies have expressed their concern over the possibility of thousands of taxpayers receiving particularly high ENFIA pay notices due to the changes and the inclusion of farmland in the supplementary tax sums.

The problem took on a bigger dimension when the ministry started making its test calculations, which showed that many property owners would indeed have to pay far more than in previous years. However, those tests also showed that the payable sum for the ENFIA and its supplementary tax would come to 3.5 billion euros, while last year it amounted to 3.24 billion. This increase year-on-year comes from the fact that the tax-free threshold in the supplementary tax has dropped to 200,000 euros from 300,000 euros up to 2015, while tax rates have been raised and farmland has also come in.

That cushion of almost 300 million euros, combined with the anticipated political cost, led the government to a number of changes. The farmland was excluded at the eleventh hour from the supplementary tax calculation on the pretext of “a multitude of errors observed in the declarations by citizens, who in the next period will be asked to correct their statements,” the ministry announced.

The exemptions from the ENFIA will remain exactly as they were last year, thereby abolishing the clause that waived the discount for owners with takings from bank interest of more than 300 euros per year. The exemption is also restored for the unemployed, families with four or more children and individuals with a disability of 80 percent or over.

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