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22ndannualcapital

The political errors of the single property tax

The Greek Finance Ministry announced outstanding bills due for the new Single Property Ownership Tax (ENFIA) on the web, that held false information and oversights, according to reports.

Accountants claimed that properties in at least 457 districts nationwide have been excessively taxed. The Finance Ministry offered a statement assuming responsibility for the errors, but did not state if the initial payment due at the month's end would have to be submitted.

The Ministry confirmed that false information and oversights can be updated without incurring fines until November 30th, and overpayments will be paid out after the final clearing.

However Finance Minister Gikas Hardouvelis, who knows the real estate market, allowed his staff to make not just regulatory mistakes, but also political/institutional errors in the ENFIA legislation that raised dues exorbitantly including:

1. It assigned prices for plots that were outside price zones, equal to the lowest zone price in the nearest zoned local areas, this raised prices by up to tenfold.

2. It did not apply regulations for tax deductions that the law foresees. For example persons already in arrears and in dire economic circumstances are considered able to pay taxes. The ministry could have electronically cross reference the data and applied the measures to alleviate those in need. Instead now, one million citizens will have to pay half the tax and then appeal.

3. it did not take into account that the most massive tax ever could not possibly be collected in five monthly installments, as the tax from past years paid through the PPC have still not been collected, despite being paid in five bi-monthly installments. An easy way out would have been to tack on two installments in January and February, which would still be lodged in the 2014 fiscal results. Now this will necessitate legislation to rectify.

4. There is no way out of the tax. Unlike auto tax that could be avoided through turning in license plates, and property tax through the PPC where the owner could shut down power, property owners have no way out. Nor could a sale of the property be effected without the tax being paid.

Now minister Gikas Hardouvelis will have to marshal his ministry's forces in order to redress the imbalance, lest households find themselves in even more dire circumstances, with the relevant political cost.