In a sharply executed u-turn on Thursday, the government first upheld and shortly afterward completely withdrew a ministry circular that gave municipal authorities the power to backdate municipal rates on previously undeclared 'semi-outdoor' spaces.

Acting on orders of Prime Minister George Papandreou, Deputy Interior Minister George Dolios left Thursday's Cabinet meeting and went to Parliament, where he announced that the circular was being withdrawn pending legislation that would prevent municipalities from charging retroactive municipal taxes.

The existence of thousands of such illegally enclosed building features, known in Greece by the shorthand 'semi-outdoor spaces' and usually the "handiwork" of contractors wishing to offer bigger apartments to buyers, was recently revealed when owners took advantage of measure allowing them to 'maintain' illegal building conversions for 40 years by paying a lump sum.

By giving municipalities a "green light" to possibly charge backdated rates, the government was seen to be backtracking on promises to owners making use of the measure that they would be exempt from retroactive taxes, new fines or surcharges in the future.

In reply to a question from the ANA-MPA on Thursday morning, Dolios confirmed that the law governing the 'settlement' of illegal conversions and extensions in 2010 did not exempt them from any local authority taxes that would have been due -- but only the real estate property tax.

He noted that local authorities in any case had the right to charge taxes based on the total surface of a building, whether enclosed or open, and that this right was not affected by the environment ministry bill, which had not specifically referred to it.

Dolios went so far as to say that municipalities had a duty to include such spaces in the calculation of taxes, since they would otherwise be discriminating against those who had originally declared such spaces, as they were required to.

In his subsequent announcement, Dolios said the government would bring legislation that abolished or forbid local authorities back-dating the municipal rates due to them.

ND reaction

Meanwhile, main opposition New Democracy (ND) party subsequently lashed out at the government, accusing it of misleading the people regarding the settlement of the illegally enclosed spaces on buildings and their legalisation for a period of 40 years.

ND spokesman Yiannis Mihelakis called on the government to immediately withdraw an interior ministry circular attempting to impose additional taxes and fines, even backdated, on the spaces in question that were legalized pursuant to Law No. 3843/2010.

Mihelakis stressed that “the people do not trust the state anymore because it lies and misleads”.

Referring to the shipping sector, he accused the government of following an inadequate policy.

As regards the public property exploitation issue, ND accused the government of missing the essence of the matter and pulling publicity stunts.