“No more taxes on real estate”
In his speech, Bank of Greece director Yiorgos Provopoulos predicted unemployment of more than 19% and around 5% recession for the next year...
As he mentioned the measures that will have direct impact are:
- regulations that will improve the business environment, such as dealing with bureaucracy, reduction of the administrative burden for enterprises, simplification of the regulatory framework and restoration of competition in the markets
- acceleration of the privatization program, which in addition to the revenue that will reduce the debt, generates additional investment and opportunities for foreign investments, involving technology transfer and productivity improvement
- faster utilization of the NSRF funds and securing of resources from international organizations such as the European Investment Bank, to restart major infrastructure projects that have been discontinued
Structural changes for the transition to a new growth model
Meanwhile, Provopoulos calls for reforms that will change the growth model, such as
- strengthening the competition in the markets for goods, services and production rates
- modernization of public administration
- ensuring a stable tax system, friendly to growth
- speeding up the administration of justice
- encouraging innovation, research and extroversion
- strengthening effectiveness on all levels of education
None of this is new. Their necessity has already been recognized and measures have been decided concerning many of them. However, the implementation pace remains slow, making their positive effects practically invisible. At the present critical juncture, all these changes must now be implemented at once, with courage, determination and certainly without any rebate.
Emphasis on real estate taxation
Provopoulos sent a distress signal about burdening the real estate market because of the tax raid. "The significant increase in the tax burden on real estate over the past three years has been estimated to accentuate the downturn in real estate. Apart from this burden, the constant announcements and postponements of various additional measures prolong the uncertainty on the taxation of real estate and making a future recovery of the market even more difficult. For example, the increases of objective prices, even though they had been proposed many times before, have not been implemented yet. However, the adjustment of objective prices to the price levels of the market is expected by June 2012."
The increase in objective property prices is expected to bring significant adjustments to their taxable value, dragging many taxes up and adding to the intense uncertainty and downturn in the Greek real estate market. Such an adjustment should be coupled with the rationalization of the taxation of real estate, both in the direction of reducing the taxation of transfers and the elimination of individual taxes, and establishing or maintaining a very small number of single taxes to replace the plethora of the existing ones.
Finally, Provopoulos noted that the readjustment of objective prices in property in line with the real estate market should not be done with some equivalent percentage change of all the current objective values, as the shift in commercial property prices from early 2007 until today, varies considerably between the different geographical regions.
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