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Bad omens for Cyprus economy

Revenues flowing into the Cyprus government’s coffers dropped in January 2010 sounding alarm bells in the Finance Ministry for the economy and what the fiscal deficit might reach in the coming year.

MORE bad news for the Island’s Finance Ministry has come in the last week from figures published by the Customs and Inland Revenue Departments. Indirect taxes and Inland Revenue tax collections were down in January by a total of €9.9 million on January 2009; a fall of 2.6%.

State revenues from indirect taxes fell by €9 million to €145.3 million last month from €154.4 million in January 2009.

  • VAT revenues fell 4.1% to €118.1 million from €123.2 million last year.
  • Import duties slumped 21.2% to €2.5 million as a result of lower consumer demand.
  • Consumer tax on vehicles and motorcycles fell 43% to €4.9 million from €8.5 million last year.

These figures are even more alarming considering that that last year’s base was very low. The Finance Ministry has based its fiscal plan on the assumption that state revenues from indirect taxes will grow by 9% in 2010.

One good piece of news was that consumer tax from tobacco rose 3.25% to €18.2 million from €17.6 million, despite a smoking ban being in operation since the start of the year.

Indirect taxes in Cyprus for January 2010

Source: StockWatch

Figures from the Inland Revenue are more encouraging; collections fell by €0.8 million to €228.5 million last month from €229.3 million in January 2009; a drop of just 0.4%.

Immovable Property Tax, Stamp Duty and Capital Gains Tax revenues all made gains, which may result from the slight improvement in the number of property sales during January and the efforts of the Interior Ministry to accelerate the issue of Title Deeds.

Cyprus Inland Revenue Tax Collections for January 2010

Source: Cyprus Inland Revenue Department

Readers' comments

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  • Greg Gregory says:

    @whirlybird 2 Cyprus can’t devalue the Cyprus Euro as it is in the Eurozone and manage it’s finances as a result which is why the U.K is rubbing it’s hand with glee for not being part of it and as a result is able to control it’s own finances and economy more effectively and speedily

  • whirlybird 2 says:

    Perhaps the Cyprus government officials should take a deeper look at some of the reasons as to why there is very little cash flow into the economy, ie. stop the Developers and their associated aides scams to make way for legitimate payments to government coffers, also reduce the value of the Cyprus Euro as everything is still dual priced and this is not helped by the retailers buying cheap goods overseas then repricing them against the Cyprus Pound thus gaining a few extra Euros for the goods.

    More and more people are themselves buying abroad and shipping it over here, (this is one way to stop some of the greed) the costs in some cases are less than half the local price.

  • Dee says:

    Wake up Christo, this recession won’t cure itself!

  • baileyboy says:

    Hopefully this shortfall will speed up the process to the Title Deeds bill which is currently being reviewed.

    Pushing the bill through urgently and increasing/retraining staff at the Land Registry would not only wipe out the 9 million loss but also bring Cyprus out of the recession. The proposed changes to the title deeds will help to simulate the ailing construction sector and encourage foreign buyers to look at Cyprus as an option.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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