VAT on property
Isn’t imposing VAT on property against the principle of a more progressive tax system? Yes, we are accused of this, again obviously out of ignorance. First of all, this is not a new tax, because the cost factors of apartments are already subject to VAT, also imposed on the property transfer tax, which is to be abolished. The new tax will most likely be around the same level. The extension of VAT to property tax was decided in 1987 when VAT was first introduced to Greece, but we have continually been obtaining postponements from the EU to the point of becoming a laughing stock. Moreover, extending VAT to property is necessary if we want to restrict tax evasion, which is enormous in the construction sector. At some point we have to decide whether we really want to stop tax evasion or to encourage it. We should not complain about it and then prevent the adoption of controls such as VAT. Of course we realize that there are huge interests involved and I understand their strong opposition. However, it is ridiculous to defend these interests with the argument that the lower income brackets are being affected. Those who are most affected are probably those who fill their pockets with money from evading taxes. But you are suggesting the abolition of property transfer tax exemptions, and that is what is creating such concern. That is not so. Let me read you the sentence from our summary: «With regard to exemption from VAT on first homes, the commission recommends converting this exemption to direct subsidies, and not by lowering VAT, which would create administrative problems in practice.» In the report we explain what these problems are. I am not about to run for mayor of Athens, nor found a political party. I am sure that what we propose will be carried out and that after some time Greek taxpayers will have a better idea of what the issue is all about.
