Greece to raise funds through a property tax

Greece’s cash-strapped government is to impose a new property tax on top of existing austerity measures, to compensate for a revenue shortfall that is threatening to disrupt its vital international bail-out programme.

The government also decided yesterday, in a symbolic move aimed at a public angry at politicians, to dock a month’s pay from all elected officials – from the head of state to the country’s 325 mayors.

“It is better that we all lose something than lose everything, forever,” prime minister George Papandreou said at a news conference in Greece’s second-largest city of Thessaloniki.

He said Greece is in a constant fight to ensure it can continue paying salaries and pensions, and rejected talk of the country leaving the common European currency and returning to its old monetary unit, the drachma.

“For a country to leave – any country, I’m not necessarily talking about Greece – it will create a domino effect, a pressure on other countries, and will remain as a wound, if not the beginning of the break-up of the entire system,” he said.

Mr Papandreou, whose party is trailing the main opposition conservatives in opinion polls, also ruled out early elections. He said he had discussed forming a coalition government with the conservatives, who he said “were not mature enough for it, and still are not”.

Debt-crippled Greece urgently needs to keep a programme of cutbacks on track to secure the continued flow of international rescue loans - €219 billion (£188bn) – protecting it from a catastrophic bankruptcy.

Finance minister Evangelos Venizelos said the new property tax will be levied over the next two years and will cost citizens an average of €4 per square metre.