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The property tax increases for 2.5 million Greeks, who will have to pay more money to the state next year, because they have a house of their own. Earlier this week it became clear that the government decided to revise the law for the taxation of real estate voted last year by reducing the tax exempt value of the buildings from 400,000 euros to 100,000 euros.

This range includes flats between 60-80 sq. m, which are the most widely owned by the middle class in Greece. The measure has caused severe response among economic analysts, the main argument being that the government of George Papandreou once again is taking rash measures and looking for easy profits without taking into account how this decision would affect the market. In other words, keeping the exempt basis is meaningless because almost all property owners will have to pay the tax.

At the same time, they say that the tax on real estate (ETAK) that was canceled in 2009 and that applied to all came back in various forms with the reduction of the exempt tax base. When PASOK came in power it announced it would cancel the property tax ETAK, because it was not fair to the owners of smaller homes compared with those owning larger property.

"Taxation of real estate should be based on a new progressive system, burdening mostly large estates for a fairer distribution of the tax burden." Initially, this was the intention of the Minister of Finance Georgios Papakonstantinou year and a half ago, when he cancelled ETAK and began the endless reform of the tax system, which is still taking place. People in Greece often comment that they live in a country where everything is next to the last. Tax laws are being changed, reformed, renewed or restructured several times a year, and every decision is turning out to be more imperfect than the previous one.

Obviously, the troubled Socialist government is currently trying to emerge from the morass of the uncovered costs in any way. So, it is again increasing taxes and not cutting the wasteful public sector. According to initial information, the owners of real estates worth between € 100,000 and € 400,000 will pay tax of 2% of the taxable value. It, in turn, is expected to rise in the autumn in order to be aligned with the real estate market value to enable the state to collect higher taxes.

The owners of small homes or hereditary houses in the countryside, which do not have rental income, but will have to pay a higher tax, will experience the greatest difficulties under these conditions. Many economists advise the owners of such properties to sell in this case, but the recession and the lack of bank liquidity froze the real estate market, the demand is very low and the short-term prospects are more than dark.

Meanwhile, the British real estate market registers a rapid growth of investors from the Mediterranean countries. The Greek wealthy are among the most regular and best customers of the real estate agencies that offer luxury real estates in some of the most expensive areas of London. A small apartment of 60 sq. m in Knightsbridge, for example, costs between 1.2 and 1.4 million pounds and the main buyers are Greek entrepreneurs.

"When the political crisis in North Africa and the problems in Egypt began, the phone calls in the office increased. A flood of phone calls followed the beginning of the Greek economic crisis," said the CEO of a well-known consulting firm for investing in real estate, Mark Harris. He explained that three of every five business calls are with Europeans investors who want to invest their money in real estate in the UK.

The real estate prices in London have risen by 36% from 2009 onwards and the trend is expected to continue. The percentage of European investors in real estates in London increased from 11% to 18% in the last year. Of these Italians are 5%, the Greeks are 4.5% and the Spaniards are only 2,5%.

So, the small elite of wealthy taxpayers from the countries with financial difficulties from the periphery of the euro area will remain unaffected by the new higher taxes on real estate, and the total burden will be taken by the average taxpayer again. In this line of thought, many analysts estimate that the lower level of the tax exempt value of houses would only worsen the public feeling in Greece, but would not contribute to the budget revenues significantly.