Immovable property tax - inhuman and absurd
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?
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.
it is a wealth tax.
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.
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.