Im­mov­able prop­erty tax - in­hu­man and ab­surd

Financial Mirror (Cyprus) - - FRONT PAGE -

The pre­vi­ous ad­min­is­tra­tion raked in EUR 11 mln in 2011 from the Im­mov­able Prop­erty Tax (IPT). In 2012, the rev­enues from the same tax shot up to EUR 25 mln.

As re­gards 2013, the pre­vi­ous gov­ern­ment had pro­posed a tax hike in or­der to raise the sum of EUR 200 mln.

In the end, the new ad­min­is­tra­tion that came into of­fice in March 2013, low­ered that fig­ure but man­aged to col­lect EUR 100 mln for 2013 as well as for 2014.

The ques­tion to be an­swered is abun­dantly clear: What kind of tax is the IPT? Why has it mul­ti­plied by ten times in just two years?

not

It is surely a tax on in­come gen­er­ated by prop­erty, as prop­er­ties which gen­er­ate no in­come, like bar­ren plots of land, are taxed as well. On the other hand, prop­er­ties that earn rent also pay IPR and in­come tax, as well as the de­fense levy, the re­sult be­ing that they are in ef­fect be­ing triple-taxed.

It is also a fee, be­cause it does not re­flect the cost of any kind of ser­vice of­fered by the state to the prop­erty or the prop­erty owner.

As far as the con­cerned

Let it be clear that prop­erty own­ers are not, by def­i­ni­tion, wealthy as they might be bur­dened by loans, which are some­times larger than the value of the prop­erty it­self.

not

gov­ern­ment

it is a wealth tax.

and

po­lit­i­cal

par­ties

are

The gov­ern­ment’s fi­nances are in very bad shape and the ad­min­is­tra­tion is try­ing to col­lect funds for the state cof­fers by im­pos­ing tax­a­tion, re­gard­less of the dam­age th­ese may in­flict on the econ­omy.

Po­lit­i­cal par­ties also re­gard this as a if one is to judge by their readi­ness and will­ing­ness to vote for it with­out sec­ond thought.

Im­pos­ing ab­surd taxes is the easy way out, both for the gov­ern­ment as well as the po­lit­i­cal par­ties. In­stead of cut­ting back on reck­less state ex­penses, they pre­fer to sacrifice prop­erty own­ers.

wealth tax

Our in­dus­try’s po­si­tion is clear. The IPT must not be a wealth tax be­cause if the gov­ern­ment re­ally wanted to tax wealth it should have taken into ac­count the net value of th­ese prop­er­ties, bring­ing into the equa­tion the loans on th­ese prop­er­ties as well. A ques­tion that begs for a con­vinc­ing an­swer is the fol­low­ing: Why don’t they tax stocks, bonds, art paint­ings, yachts, etc., if they wish to tax wealth? The prob­a­ble an­swer is that prop­erty own­ers are an easy tar­get.

Why, then, is the tax­a­tion in ques­tion ab­surd and in­hu­man?

In ad­di­tion to all the rea­sons al­ready men­tioned, this tax is col­lected from own­ers who, in their vast majority do not have the abil­ity to pay the tax in the first place. One way or another, prop­erty own­ers will find the cash to pay the tax, the law abid­ing cit­i­zens that they are. How­ever, the re­sult is to put another stran­gle­hold on mar­ket liq­uid­ity and force prop­erty own­ers to think about sell­ing their prop­er­ties.

It is all an at­tempt to col­lect money to pay the pub­lic ser­vice which will end up in a black hole.

With all th­ese facts on the ta­ble, it is clear that what is needed is for the re­struc­tur­ing and re­duc­tion of all taxes re­lated to im­mov­able prop­erty.

Taxes have reached pro­hib­i­tive lev­els and are chok­ing trans­ac­tions and the much-needed real es­tate sec­tor re­cov­ery.

The IPT and the mu­nic­i­pal prop­erty tax must be in­cor­po­rated and re­duced to re­flect the level of ser­vices, (parks, pave­ments, bi­cy­cle lanes, street light­ing, re­lated to life qual­ity), and the in­fra­struc­ture of­fered to prop­er­ties by the mu­nic­i­pal au­thor­i­ties.

It is only then that the par­tic­u­lar tax­a­tion will stop be­ing in­hu­man and ab­surd and will be paid by cit­i­zens with­out com­plaint.

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