Greece slaps new tax on property to cut deficit

The tax will range from half to 10 euros per square meter of construction and will be in effect for two years, Venizelos said.

Greece slaps new tax on property to cut deficit

Greece on Sunday slapped a new tax on real estate to plug a 2011 budget hole, please international lenders and secure a key new loan tranche as concerns mounted in Europe over its euro zone membership.

EU and IMF inspectors are due in Athens this week to hear how the government plans to overcome delays and missed fiscal targets before approving an 8 billion euro tranche from its 110 billion euro bailout, key to Greece's survival.

Finance Minister Evangelos Venizelos said the cabinet agreed the measure to raise about 2 billion euros missing from the government's coffers and to meet the 2011 budget deficit target, estimated at around 8.1 percent.

"It's the only measure that can be applied immediately and produce results quickly because it does not depend on the tax collecting mechanism," he told reporters, adding the levy would be collected through electricity bills.

Prime Minister George Papandreou, who chaired the informal cabinet meeting in Thessaloniki on Sunday, said in a speech late on Saturday he was determined to do whatever it takes to save Greece from bankruptcy and keep it in the euro.

He was responding to renewed talk in European capitals that Greece's will to comply with the bailout plan and stay in the euro bloc may be wavering.

EU and IMF inspectors have repeatedly told Greece to avoid more economy-stifling tax measures and focus on structural reforms and spending cuts, including shrinking the large and inefficient public sector.

"Taxing property is the easy solution for revenues," Yannis Revithis, head of the Athens real estate brokers' association, told Greek TV. "But the real estate market cannot bear any more taxes."

The tax will range from half to 10 euros per square meter of construction and will be in effect for two years, Venizelos said.

The inspectors, known as the troika, interrupted a visit on Sept. 2 after a row over the size of the budget shortfall and its cause. Athens blamed it on a bigger than expected recession and Venizelos said on Sunday the economy would shrink by about 5.3 percent this year.

But the troika said that was only a small part of the reason and asked for urgent steps on privatisations, shutting down state organisations and cutting the number of civil servants.

Reuters

Last Mod: 11 Eylül 2011, 16:35
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