The government is leaning toward a substantial cut in the property transfer tax from January 1, 2003. Currently, the rate is 9 percent on the first 4 million drachmas (11,739 euros) of the value of the property, and 11 percent on the rest of the property value. The government proposes to lower these rates to 6 percent and 8 percent respectively, thus adopting the proposals of a committee of experts which handed in its report on tax reform in April. The report called the property transfer tax «questionable,» adding that it was out of step with economic policy needs because it acts as a barrier to the sale of houses and offices. Lowering the tax will cost the State considerable revenue. Whereas, for example, it currently gets 16,266 euros from the sale of a 150,000-euro apartment, the transfer tax in this case will drop to 11,765 euros. To make up for the lost revenue, the government plans to abolish a series of tax breaks favoring mostly higher incomes. Other proposals, such as the imposition of a single property tax or the introduction of value-added tax (VAT) on property, appear certain to be shelved due to the inability of Finance Ministry services to adapt to the new taxes smoothly and the lack of political will to introduce VAT and drive property prices even higher. The government is mindful of the fact that the property market has yet to experience a proper cycle: Prices have only gone one way, upward, and with the Athens Olympics looming, it is unlikely they will start falling any time soon. Besides property taxes, Finance Minister Nikos Christodoulakis is also concerned by how much to raise the tax-free ceiling and by how much to reduce the top income tax rate. According to sources, Christodoulakis has been advised by ministry officials to raise the tax-free ceiling to 13,200 euros. This would mean that 71.9 percent of taxpayers, or slightly over 3.5 million people, would pay no income tax at all. The loss to the State would not be particularly great: Finance Ministry statistics showed that this group contributed only 5.4 percent of the income tax revenue. Officials also stress the need for a cut in the top income tax rate to 38 percent, from the current 40 percent.