Venizelos is rethinking the extra contribution on taxes and real estate

The Troika heads are to meet once again in Athens to see the changes Evagelos Venizelos will bring to the mid-term, in order to ensure that they approve of them. The aim of the Finance minister is to boost the real economy with measures out of the memorandum mandates.

Already in Luxembourg, IMF representative Poul Thomsen, presiding at the Eurogroup and Ecofin meetings for Greece, wanted to know Venizelos’ plans, but said it would be better to discuss them in Athens.

Returning from Luxembourg, the finance minister will have to pass the mid-term and its accompanying laws through the “Symplegades” of the government and the other parties, and finalize measures of 6,4bil euros for this year.  

Meanwhile, the economy team must deal with the large gap in the budget, already at 3,2bil euros, speed up the privatizations, proceed with the plans for the consolidation of SOEs and complete important reforms such as that of the taxation system.

As government sources say, the following measures are being reexamined on the taxation front:

- Extra contribution

According to former minister G. Papakonstantinou’s last proposal, the poll tax will be implemented on incomes above 12.000 euros at rates from 1 to 3% depending on the amount of declared income (actual or imputed), and will thus involve more than 3mil taxpayers. According to the mid-term fiscal strategy framework, revenue from the contribution for the current year is estimated at 400mil euros.

- Real estate

The final ceiling for the tax-free limit on property tax remains open. Papakonstantinou’s proposal provides for its reduction from 400.000 euros to 200.000. Owners are finding themselves in a stranglehold of taxes this year since besides property tax, they will have to pay a new charge imposed and collected through PPC bills, as well as an extra contribution.

However, the freezing of the increase on objective values and the suspension of statements for the acquisition of properties (first, second, country house), are considered as certain, at least until 2013, since they were only recently proposed by the new minister.

The finalised measures

The measures that have already been finalised and probably will not change, include:

•     Vehicular tax increase of 10%
•     VAT increase in restaurant services
•     Tax increase for cheap cigarettes
•     Special tax on natural gas
•     Special contribution on pools and yachts
•     Imposition of new unemployment contribution on public servants’ wages at 3%, and its increase by 0,5% in the  private sector and businesses
•     10% reduction of the lump sum and reduction in supplementary pensions
•     An 8% special contribution for pensioners below 60 with pensions over 1.700 euros, and a general increase for pensions over 1.700 euros