Investor Insight

Greece is now on a mission to prove that they can do sums and are desperately trying to stave off either a looming bankruptcy or the very real possibility of an enforced leaving of the Euro zone.  Last week the government announced a new emergency property tax which aims to plug the £1.7bn budget shortfall.

Emergency Tax Levy

The new Greek property tax levy will cost around €1,000 for the average household and has similarities to the poll tax which was so unpopular in the UK. These emergency tax measures come on top of a barrage of other austerity measures.The Greek government, who, by their own admission, have a ‘leaky’ system when it comes to collecting taxes, want to collect the new property tax via electricity bills, thus ensuring that foreign-based owners are included in the collection.

However, the Greek electricity workers union, GENOP, have said that it is not their responsibility to collect taxes on behalf of the government and will oppose such measures.

Another issue is tax dodging via the wealthy inhabitants of Greece. It is estimated that only 25,000 Greeks declared salaries of more than €100,000 p.a. The finance minister has stated that the country needs to raise around €2bn to meet the 2011 budget deficit target.

The Greek finance minister Evangelos Venizelos further commented;

A collective effort is needed to save the country, and parliamentarians, from the president downwards, would also see their wages docked.

Undeclared Room Tax

Earlier this year there was an announcement that a new bill was to be  introduced which would add surcharges of up to 20% on any properties that have new extensions or rooms added on. Currently property owners pay taxes in accordance to the size of the rooms within the home. Corrupt builders evaded the tax by forming outdoor spaces which were later closed in after the land inspection has been completed. Foreign investors may be unaware of the ‘secret room’ tax and could be sent a large bill running into thousands for a spacious villa home.

Another form of property tax-’the roof tax’ was evaded in similar fashion by leaving steel rods sticking out of the top of buildings so the property qualifies as ‘incomplete’ and incurs less tax as a result.

Widespread corruption is at the heart of Greek culture, and this cannot be cured with a few extra taxes.