Greece to stop collecting property tax via electricity bills

ATHENS Thu Dec 12, 2013 12:33pm EST

ATHENS Dec 12 (Reuters) - Greece plans to stop collecting an unpopular property tax through electricity bills and impose a unified real estate levy instead, after an outcry over poor households whose electricity was cut off for failing to pay.

The finance ministry said it would submit a bill to parliament later on Thursday proposing a new levy on property to be collected directly by tax authorities from 2014. It said the levy was aimed at protecting Greeks with low-value homes.

Inspectors from the European Commission, European Central Bank and the International Monetary Fund, who arrived in Athens this week to resume a review of the country's bailout programme, had approved the bill, a finance ministry official said on condition of anonymity.

The controversial property tax was introduced as a one-off measure in 2011 to help the country raise revenues as it struggled with a deep recession. The government has extended it through 2013 to the dismay of austerity-hit Greeks, who have suffered several rounds of wage and pension cuts.

The property tax and a second, smaller levy on real estate assets brought in about 2.9 billion euros ($4 billion)annually. Athens expects revenues to fall to 2.65 billion euros under the new unified levy, the finance ministry official said, and to offset the projected shortfall, the government will cut its public investment programme by 200 million euros.

Leftists and anti-austerity activists have railed against the property tax since its inception, saying it is unfair and burdens the poor.

The tax was back in the limelight earlier this month after at least three people died in accidents as they tried to keep warm by using charcoal grills, wood stoves or candles after their power had been cut off.

That prompted authorities to promise to restore electricity to homes and the energy ministry said 2,000 households had already had their power supply restored. ($1 = 0.7271 euros) (Reporting by Lefteris Papadimas; writing by Renee Maltezou; editing by Andrew Roche)