Property tax cut likely still on

Tax revenue over the seven months of the year, at around €24.4 billion, fell €101 million, or 0.4%, short of the government’s target, but still exceeded last year’s, raising hopes that the government can go ahead with tax cuts in 2022, including in the Single Property Tax (ENFIA).

The government had hoped to reduce the property tax by 8 percentage points and this is “one of the things still under consideration,” Finance Minister Christos Staikouras told Open TV yesterday, but without firmly committing himself.

The property tax cut will be considered in November, after the revision of the so-called objective property values on which the tax is based.

There will be no extra tax burden after the revision, Staikouras said, but the procedure will help eliminate some of the distortions of the system. 

While the aim of the objective property values is to reflect market value as closely as possible, this is not always the case. The system was set up decades ago to fight tax evasion through the underreporting of property transactions.

The January-July tax revenue was €1.8 billion higher than during the same period in 2020. 

Government officials are hoping for a return to some kind of normal, without further lockdowns, to keep the economic recovery strong. It is quite likely that growth in 2021 will exceed the government target of 3.6%.

“The situation with revenue is good… industrial production and tourism are going well. If this continues, despite the global turbulence (from the pandemic)… we will consider all facts when we introduce the draft budget, in early October,” Staikouras said.

Revenue from the value-added tax was €92 million above the target, and €50 million in VAT came in July, a sign of consumption picking up. There was also more revenue from individual taxpayers (by €69 million), but less from corporations (by €163 million).

Total budget revenue was €651 million below the target due to a €1 billion shortfall in the Public Investment Program – the result, an official said, of a delayed EU payment.

The primary budget deficit was €9 billion, lower than the expected €9.6 billion, despite higher pandemic support payments.