Last week the cabinet approved a bill extending the deadline for payment of IPT to the end of November. The current deadline is September 30.
Additionally, an increased discount would be given this year to those paying by October 31.
The bill provides raising the discount from 10 per cent to 15 per cent. If the IPT is paid online or through a bank, the discount will be 17.5 per cent.
The legislation is coming up for a vote at the House plenum this Thursday.
But during a discussion in parliament on Monday, DIKO proposed increasing the early-payment discount to 20 per cent, across the board.
DIKO MP Nicholas Papadopoulos said this would incentivise more people to pay their IPT and on time, thus also helping the state’s cash flow.
It was a temporary fix for 2015, Papadopoulos said, as his party’s real demand is for a greater discount to be implemented on a permanent basis.
Inevitably the discussion turned broadly to the new method of calculating IPT.
This year is the last that IPT will be paid based on 1980 prices.
As part of its bailout agreement, Cyprus was required to update its property values. Although the government proceeded with revising the property prices, and intended to levy IPT accordingly starting this year, this has now been pushed back to 2016.
The opposition argues that as a result of the updated values the state stands to generate far more revenues – about €120m more – than even suggested by Cyprus’ international lenders.
“We need to bring this amount down to €100m because the tax, as it has been shaped, is an unbearable toll on small and medium-sized businesses and households,” Papadopoulos said.
Ruling DISY said it would back DIKO’s proposal for extending the discount to 20 per cent. And main opposition AKEL, though grumbling about the government’s tax policy, intimated that it would likely support it as well.
But finance minister Harris Georgiades did not appear to be on board.
The impact on state finances should be calculated before such a proposal could be considered, he countered.
“It is the government’s intention to gradually and sensibly alleviate the tax burden for properties”, Georgiades said.
“There is no room for populism here, we shouldn’t be competing on who gets to offer the bigger discount.”
The minister also dismissed calls for recalibrating the discount based on the staggered IPT rates, which parties argued would make this year’s markdown more targeted and fair.
It was too late to tamper with these details, the minister said, as the IPT forms are already being sent out to people.
According to data Georgiades furnished MPs, in 2014 the state collected €104m from IPT, local administration authorities a further €14m, while property transfer fees came to €53m, for a total of €171m.
In 2014, 79.9 per cent of eligible people paid their IPT.
Data showed that the lower the IPT rate, the higher the percentage of collection. For the 0.006 tax rate, the collection percentage was 92.21, 91.15 per cent for the 0.008 rate, 90.49 per cent for the 0.009 rate, 86.53 per cent for the 0.011 rate, and 82.08 per cent for the 0.013 rate.
The collection percentage dropped to 72.43 per cent when it came to the 0.015 rate, 65.85 per cent for the 0.017 rate, and only 63.11 per cent of those charged with the highest rate, 0.019, paid their IPT.
Georgiades pledged, however, that an overhaul of IPT system was in the pipeline.
“If we decide early on the taxation for 2016, we may even be able to afford people the ability to pay the tax in two or three instalments throughout the year,” he said.