- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Tax revenues slump, deficit increases

TOTAL tax revenues collected by the Cyprus Inland Revenue Department during the first eleven months of 2009 fell by 15% to €1.56 billion from €1.83 billion during the same period last year; a reduction of €272.79 million which is entirely attributable to the collapse of the Island’s property market.

Inland Revenue Tax CollectionsJan – Nov 2009
€ millions
Jan – Nov 2008
€ millions
Increase/ Decrease
€ millions
%age
Change
Income Tax
– Employees438.40393.7244.6811.3%
– Self employed51.0951.84-0.75 -1.4%
– Corporation Tax580.04631.77-51.73 -8.2%
Immovable Property Tax10.2511.18-0.94 -8.4%
Capital Gains Tax66.26291.04-224.78 -77.2%
Special Contribution to Defence Fund325.93341.93-16.00 -4.7%
Stamp Duty38.1260.77-22.65 -37.3%
Penalties39.1841.34-2.16 -5.2%
Other Taxes8.316.771.5422.8%
Total Collections1,557.581,830.36-272.79 -14.9%

Inland Revenue Tax Collections (source: Cyprus Inland Revenue Department)

The Island’s Finance Minister, Charilaos Stavrakis, is expected to meet with MPs and social partners today to present the government’s action plan to reduce state expenditure and increase revenues.

In his budget address two weeks ago, Mr Stavrakis ruled out the possibility of any cuts in the salaries of civil servants. However, when confronted by representatives of coalition partners DIKO and EDEK just before Christmas, he said: “When you have 60,000 civil servants, it is very possible that you’ll have some who get paid without working. This is very natural. It happens in every public and private organisation. The issue is to establish, together with the other parties, the legal tools which will allow us to punish those employees who are taking advantage of the Cypriot taxpayer.

An additional 4,312 people have been employed in the broader public sector during the last five months alone and ministries are demanding more personnel for the coming year to cope with the increasing workload.

In 1990, €372 million went toward paying the wages of civil servants and employees in semi-governmental organisations. By comparison, the 2010 budget provides for €1.9 billion.

According to figures announced in parliament during the budget debate, in July the number of people employed in the public sector stood at 63,719. This month, it has risen to 68,031.

A deputy said that for every Euro in revenues generated by the state in 2010, 38 cents would go to paying wages, nine cents to pensions, 22 cents to running expenses and 11 cents to loan servicing, leaving just 20 cents to finance development projects and welfare.