Unable or unwilling to collect $70 billion in unpaid bills of tax cheats, the Greek government’s turning to higher taxes for those who can’t evade them has pushed property taxes up 600 percent in less than three years.
The Greek news agency ASNA reported that economic analysts blame the government for letting tax evaders escape while putting the burden on workers, pensioners and the poor who have been hit with pay cuts, tax hikes and slashed pensions under an austerity program demanded by international lenders.
Prime Minister Antonis Samaras’ coalition government last November pushed through a $17.45 billion spending cut and tax hike plan but has yet to propose a plan to go after tax evaders, despite pressure from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up $325 billion in two bailouts.
The soaring property taxes have had another deleterious effect: scaring off property buyers and foreigners who used to flock to Greece for land and houses but now don’t want to pay the taxes.
Analysts pointed out to ANSA that, “Over the past few years every failed attempt by the government to crack down on tax evaders invariably led to an increase in real estate taxes. The figures speak volumes: in 2012 Greeks paid 2.75 billion euros in real estate taxes, compared with the 526 million paid in 2009, while in 2013 the government hopes to be able to bring in 3.2 billion to state coffers: six times what taxpayers paid in 2010. The National Property Owners Confederation (POMIDA) has said that there are 40 different taxes on real estate in Greece.
The government still hasn’t checked a list of 2,062 Greeks with $1.95 billion in secret deposits in the Geneva, Switzerland branch of HSBC for possible tax evasion, despite international publicity over the scandal which has led to an investigation into the handling of the list by former finance minister George Papaconstantinou.
POMIDA Chairman Stratos Paradias said at the group’s 30th national conference that, Since 2009, “Several economic and other measures have been brought in which are destructive and against the interests of property owners and which led to a collapse of the real estate market and the impoverishment of owners, who have seen all profits slip away during the economic crisis – while at the same time finding themselves unable to pay the steadily rising taxes.”
He said that many many owners would like to get rid of the burden of taxes that being a property owner entails in by selling their real estate but are having trouble finding buyers. According to a survey conducted by the Kappa Research institute on a sample of 1,414 people throughout Greece, 54% of Greeks will this year not be able to pay real estate taxes and will have to choose between three possibilities: selling one of their properties to pay the taxes on the others, request a bank loan, or let the State seize the property.
The same percentage (54%) of Greek real estate owners said that they no longer earned any profit from their properties but still had to continue paying taxes. One in four Greeks (25%) have fallen behind on loan payments, while 48% say they are certain that they will soon no longer be able to pay off their bank loans. The survey also noted that the vast majority of Greeks (82.7%) believe that it is no longer worth it to own real estate, or that it is counterproductive, while over half of those surveyed said that it is better to rent a home than own it.
ANSA reported that in a meeting with Finance Undersecretary Giorgos Mavragannis, the high-ranking members of POMIDA warned that the State may not be able to collect the latest property taxes.
“If the government continues its unreasonable policy of taxing real estate of all kinds, it will end up in an economic disaster, wiping out entirely all those property owners unable to pay the new taxes,” Paradias said at the end of the meeting.
Property taxes were doubled in 2011 alone by then finance minister Evangelos Venizelos, now head of the PASOK Socialists. He put the dreaded new tax, bitterly dubbed “haratsi,” by Greeks using a Turkish phrase for unfair taxes, into utility bills under the threat of having power turned off for non-payment.
Venizelos also imposed 74 percent losses on holders of Greek bonds, nearly wiping out the Greek banks who need a 50 billion euros ($68 billion) government recapitalization. PASOK owes the same banks 134 million euros it hasn’t repaid.