Merger of property taxes likely to increase burden for middle-range owners

According to the National Reform Program announced by Economy and Finance Minister Giorgos Alogoskoufis yesterday, the government is studying «the integration of existing taxes on property,» in combination with the introduction of value-added tax (VAT) on newly built homes and a capital gains tax. There are now about 30 different taxes on real estate. According to sources, the single tax rate that will replace them will be higher for household properties than those owned by enterprises and used in the productive process. The tax will probably be levied on the total market value of properties – to be calculated on the basis of objective criteria – and its advocates hope it will produce a satisfactory level of revenue collection that will justify the administrative costs, at relatively low rates. There will be a limited number of exemptions. If the government ultimately approves the plan, it should include a significant reduction in the inheritance tax with a view to restricting market distortions, according to previous recommendations of Finance Ministry departments. A number of internal ministry reports are said to have shown that the integration of all property taxes would produce a significant increase in the liability of middle-range owners, many of whom would be forced to pay tax for the first time. The National Reform Program also includes a reference to the introduction of tax measures in support of large low-income families.