The new Local Government Code, which will be under public electronic consultation until Thursday and then proceed to Parliament, has caused concern among property owners due to provisions for a “Unified Fee for Cleaning and Lighting Services,” a “Local Development Fee,” and a “Regional Development Fee.”
Local Government Code: Why POMIDA calls it “local government ENFIA”
POMIDA has denounced that “the provisions cause triple annual financial burden on property owners with a new double tax in favor of municipalities, but now also regions, essentially a new annual ‘local government ENFIA’ that will apply alongside the state one, with a total rate of up to 1.05 per thousand annually!”
The Union of Greek Municipalities points out that “the Local Development Fee is not a new tax, but constitutes a merger of two already existing taxes: the TAP (Real Estate Tax) and the FIH (Electrified Spaces Tax)” and explains that “TAP ranged from 0.25-0.35 per thousand in relation to the objective value of the property and square meters. FIH was calculated per electricity supply and per square meter with different rates per municipality. With the new Code, these two taxes are merged and replaced by the Local Development Fee, which is calculated from 0.3-0.7 per thousand according to the objective value and square meters of the property.” It concludes with the observation that “regarding municipalities, no difference or additional burden for citizens arises,” even leaving a serious hint that “any different interpretations ‘serve’ ulterior motives.”
The Union of Greek Municipalities emphasizes that “the Local Development Fee constitutes a merger of two already existing taxes, TAP and FIH”
Calculation examples – How much property owners will pay
The Ministry of Interior, for its part, provides specific indicative examples that, as it emphasizes, prove that the reform not only does not necessarily lead to increases, but in many cases results in lower total burden, with simultaneously fairer and more rational distribution of costs. The first example concerns a 100 sq.m. apartment, 20 years old, in Kypseli. Currently paid annually by the owner(s): municipal tax: €17 – TAP: €31.85, so the total burden is €48.85. With the new Local Development Fee and with a rate of 0.5‰: 100 × 0.7 × 1,300 × 0.0005 = €45.50. Therefore, a reduction in annual burden of €3.35 results. The second example concerns an 80 sq.m. apartment, 10 years old, in Neapolis, Thessaloniki. Currently paid annually: municipal tax: €34.40 – TAP: €24.64, so the total burden is €59.04. With the new Local Development Fee and even with application of the maximum rate of 0.7‰: 80 × 0.8 × 1,100 × 0.0007 = €49.28. Therefore, a reduction in annual burden of €9.76 results.
Regarding the municipal fee for cleaning and lighting, it is noted that it already applies and has a compensatory character, as it is directly connected to specific services (cleaning and lighting). But what happens with the Regional Development Fee? The Ministry of Interior clarifies that the new Code provides for the first time the possibility of imposing a potential Regional Development Fee to finance critical projects under regional authority, such as maintenance and paving of provincial roads, civil protection projects, transport infrastructure, and flood protection works. The amount of the fee can only be determined by decision of the Regional Council and in any case cannot exceed 50% of the rates applied by municipalities.
How local government financial autonomy is strengthened
This is, as they emphasize, essentially the first substantial own revenue for regions, which strengthens the financial autonomy of second-tier local government, the ability to implement necessary projects, and the democratic accountability of elected regional authorities to citizens. This provision, they underline, is in full alignment with the European Charter of Local Autonomy, which establishes that part of local government resources must come from revenues over which local government organizations have regulatory discretion for imposition. Let’s see, however, what exactly the new Local Government Code writes, as posted on opengov: “By decision of the regional council, a Regional Development Fee (RDF) may be imposed, with analogous application of Chapter D of Part B of this Book, concerning the Local Development Fee (LDF). RDF rates range from zero point fifteen per thousand (0.15‰) to zero point thirty-five per thousand (0.35‰) and may vary by regional unit. Revenues from RDF are used exclusively for financing projects under regional authority.”
Published in Parapolitika
