HOUSING TAX ‘MUST GO UP’
UNION PREDICTS ‘UTTER CHAOS’, MAYORS SAY TAX RISE NEEDED TO AVERT BANKRUPTCY
PROPERTY tax must go up to avoid a local government financial crisis which could see council services suffer and staff go unpaid, the country’s mayors have warned after learning that government support payments are to rise by 29.4 per cent this year.
Nine months after the government withdrew a controversial 14 per cent hike in the tax on homeowners after an outcry over its retroactive imposition, municipalities are now demanding it go up to boost their income.
They said the increase in state funding did not even make up for the 29.96 per cent inflation officially recorded during 2018, let alone enable them to recover from existing problems, and warned that “all municipalities would be bankrupted” unless property taxes — a prime source of local authority revenue — were put up. The mayors said 23-yearold legislation on local government was out of date and needed to be modernised, while population-related distribution of government contributions was also flawed because of rapid changes in number of residents, and demanded a fresh census as soon as possible.
Cost-of-living allowances due to staff this year, in the wake of last year’s TL crisis, would mean a “considerable increase” in wage bills which most municipalities would not be able to afford, it was said.
Mustafa Yalınkaya, head of the BES municipality workers’ union, predicted “utter chaos this year” unless councils received more state funding.
“The figure of 29.4 per cent increase makes up about 8.75 per cent of the TRNC budget. In Turkey, 12 per cent of the budget is allocated for municipalities, whilst in the EU, this figure is 34 per cent,” he said.
“We maintain the view that municipalities will face great hardship through lack of funding, and it will hit them later on in the year.”
Mr Yalınkaya said there was a “great injustice” in the existing property tax regime, which he said had stood since 1996 and charged homeowners 1TL per square metre across the board.
“How can tax on a luxury villa with a swimming pool be charged at the same rate as a village house in the Mesaoria Plain? The government controls this through the law and has failed to take away this injustice.”
Lefkoşa Mayor Mehmet Harmancı slammed the rise in government contribution as “not even an increase” because it was less than inflation, while his Girne counterpart, Nidai Güngördü called for a new population count, since there had been a major rise in numbers
since the current official figure of 33,200 had been arrived at for his town. The municipality had to be reshaped according to the real numbers now living within its boundaries and using its services.
Çatalköy’s Mehmet Hulusioğlu said municipalities were already experiencing major problems as a result of rising costs, and these would only grow, leading some to a point where they would no longer be able to pay their staff. Local government reform was needed rather than such “superficial” efforts, he said. Lapta Mayor Mustafa Aktuğ said he faced particular difficulties, having “found a bankrupt municipality” when he took office last summer, and after bearing the brunt of last year’s flood disaster he now had a further loss of some six or seven million TL.
He said current funding levels took no account of inflation during 2019, and commented: “We may not be able to pay the salaries of our 165 workers, or may be forced to take other practical measures that will affect our service, like for example, not being able to pick up rubbish twice a week.
“We hope that this does not happen. But this is a very serious threat to our sustainability of services.”
His counterpart in neighbouring Alsancak, Fırat Ataser, added that far from boosting local authority income, the government was “blocking” it with tourism and education incentives which exempted businesses from certain municipal charges. He demanded a new census and Municipalities Law reform urgently.
Esentepe Mayor Cemal Erdoğan, whose council was pinpointed last year alongside Lapta as one of those in the direst financial straits, said he would be left with nothing in the coffers once staff wage rises, social insurance and Provident Fund premiums had been paid.