ALTHOUGH the government’s austerity package has been widely welcomed, a proposed tax regime on property ownership has triggered a backlash.
Finance Minister Charilaos Stavrakis had proudly pronounced no new taxes would be imposed, but he does want to increase revenue from property other than on a first home by adjusting valuations on real estate unchanged since 1980. Property and construction have been the hardest hit industries during this recession and a slump in the property market is the prime reason why the economy has lost €1 billion in earnings this year.
The Cyprus Chamber of Commerce (Keve) yesterday expressed its “grave concern” over plans to reassess the property tax system for real estate that is not the owner’s permanent residence.
Business leaders argued that re-evaluating the system at today’s prices would deal a “new blow” to the property market already struggling to survive the fall out from plummeting demand.
“This will discourage foreigners from purchasing property because the tax on real estate will increase,” said a Keve statement.
“This issue must be addressed comprehensively with all the consequences for the economy accounted for.” It said the government’s core aim must be to bring the economy out of recession not to create conditions that will prolong the slump.
Needless to say, developers and estate agents were far from happy that an industry mired in stagnation is being hampered with a disincentive.
“If the government implements this measure without incentives then there will be a backlash from us,” said developers association chief Lakis Tofarides.
Nicosia estate agents boss Costas Kadis said property was already heavily taxed and an additional burden would crush the market and scare off potential buyers.
Mr Stavrakis defended the harsh criticism by saying that the tax would be targeted at the minority who own a ‘huge’ property portfolio.