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

Immovable Property Tax 2016

Immovable Property TaxDISY LEADER Averof Neophytou’s radical proposal for slashing the state’s immovable property tax (IPT) by 75 per cent this year, and scrapping it altogether in 2017, was passed by a majority vote in Thursday’s parliamentary plenum.

The vote followed days of hectic haggling between the government and parties, each of which seemed to have its own proposal on the matter.

Ruling DISY proposed a 75 per cent discount on payable IPT for this year, and doing away the tax altogether in 2017. Its bill stipulated that IPT for 2016 would be based on 1980s prices.

The proposal was eventually backed by EDEK, DIKO, and the Solidarity movement.

It calls for payment of 25 per cent of the IPT each property owner was asked to pay in 2015, provided payment comes by October 31, 2016.

If the payable IPT is paid after this date and before year’s end, a 2.5 per cent penalty will be slapped onto it, bringing the amount due to 27.5 per cent of last year’s dues.

Payment after year-end will see a 10-per-cent penalty imposed on the amount payable.

The proposal garnered 29 votes of support, and was opposed by AKEL’s 18 votes, as well as ELAM’s two.

The Citizens’ Alliance three deputies, as well as the Greens’ two, abstained.

A government bill, which was rejected by the plenum, envisaged a flat rate on property values of 2013, as determined by the Land Registry. The finance ministry’s final proposal was a 0.035 per cent flat rate which would have raised €45 million. Of this, the central government would take €30 million and the remaining €15 million would be given to local authorities which would have to scrap their property tax.

Meanwhile, AKEL and DIKO had initially submitted their own proposal which stipulated a progressive, staggered IPT, exempting low-value properties from any tax, while imposing a higher rate to those of high value.

Addressing the plenum before the vote, Neophytou rejected criticism that DISY has served the interests of the wealthy by cutting the IPT tax rate horizontally.

“The wealthy may have more debt than the value of their assets, whereas those who have never paid tax may, in fact, be the truly rich,” he said.

He was responding to cries that the benefits of cutting the rate would be felt disproportionately more by the big land-owners and less by those with little immovable property.

“The government has left the less-privileged to pick up the tab in a bid to serve big private interests,” AKEL spokesman Giorgos Loucaides said.

“We are in favour of scrapping this tax, but by turning it into a tax on the wealthy, not in favour of the very few privileged.”

DIKO’s Christiana Erotocritou said that the party supported the fairest option “under the circumstances”.

“The 2013 valuations create many distortions, and those from 1980 are unfair, but the choice was between the devil we know, meaning the 1980 distortions, and the one we don’t, meaning the unknowns that will emerge if we employ the 2013 pricings,” she said.

Although his party backed the proposal, EDEK leader Marinos Sizopoulos said the 1980 prices are unfair, whereas the 2013 valuations were based on the distorted prices created by the property bubble.

The Citizens’ Alliance Giorgos Lillikas said all the proposals tabled contained injustices.

“We need to move toward fairness,” he said.

“As a compromise, we will vote for the least unfair proposal.”