Greece set to keep property tax via electricity bills for another year

An unpopular property tax levied through electricity bills and introduced in 2011 as an emergency measure looks set to remain in place for another year, as the troika has demanded, although government sources insisted on Friday that Prime Minister Antonis Samaras intends to hold a tough line in ongoing negotiations between the two sides.

Fearing that Greece’s tax revenues could fall short by as much as 1 billion euros this year due to delays in implementing measures, the troika insisted during talks with Greek government officials this week that the emergency property tax should continue being added to customers’ electricity bills. Greece’s lenders see this as the most effective way of collecting the 3 billion euros in revenues it brings in each year.

However, the government had planned to incorporate this tax into other property levies this year and stop collecting it via electricity bills. However, Samaras indicated in Friday’s news conference following the conclusion of the European Union leaders’ summit in Brussels that the tax may remain in its existing format.

“We are examining how the tax will be paid this year – if it will be collected via Public Power Corporation bills or another way,” said Samaras. However, he added that the creation of a single property tax would not happen until next year.

“We had said that the tax burden would be reduced and that all the [property] taxes of the last three years would be scrapped and that a single, uniform tax for property would be adopted,” he said. “This will apply from January 1, 2014.”

Sources close to the prime minister said that this week’s failure to reach agreement with the troika on a range of structural reforms, such as firing civil servants and allowing firms and individuals who owe the state money to pay in installments, came partly as a result of a tougher stance on the Greek side. They added that since Greece is producing a primary surplus and is in a position to cover its public spending, it has more scope for resisting the troika’s demands on certain points.

Speaking to Kathimerini, the head of the International Monetary Fund’s troika representation, Poul Thomsen, said there was “no one looming issue” preventing the two sides reaching an agreement. “We made substantial progress but it is a very ambitious program,” he added.

On the issue of reducing the number of people employed in the public sector, Samaras said that civil servants who have breached the ethics code would be the first to go. “Those who are proved to have committed offenses or are systematic shirkers or have gained their jobs using forged degrees will be fired,” said the prime minister. It is thought that up to 7,000 civil servants are liable for dismissal because of such offenses. The government is thought to have committed to sacking 5,000 by the end of next year.

Samaras however insisted that the pause in talks with the troika, whose representatives are due back in Athens at the beginning of April, will not impact on the disbursal of Greece’s next loan tranche of 2.8 billion euros. “We are on the right track for receiving the installment,” he said. It is thought the money is likely to be released at the beginning of next month.

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