Cabinet backs one per cent levy on share sales

By Jean Christou

The Cabinet yesterday approved a bill for a one per cent levy on the sale of shares, Finance Minister Takis Klerides said.

The draft law will be put before the House Plenum today, but there are some disagreements among the political parties, while brokerages were still asking the government to reconsider yesterday.

Klerides said that if the bill were passed and implemented today, the levy would bring the government an extra £50-55 million in revenue every year based on £20 million worth of trading daily.

This is a conservative estimate as the market often trades on volumes of between £30 and 40 million.

“This levy will be paid by the seller and only by the seller,” Klerides told reporters after the Cabinet meeting. It would not be retroactive, he added.

The levy will be charged by brokers. First the broker’s commission on the sale will be charged to the seller, followed by the Cyprus Stock Exchange (CSE) fees, and then the government’s one per cent, the Minister said.

Brokers’ representative Louis Klappas warned yesterday that the levy would signal the end of the stock market.

“The market will be damaged and investors interests will be reduced or dissipate,” he said.

Klerides said the possibility of taxing profits made on the market was also being considered.

He said he planned to exchange views with the political parties on the possibility.

Some parties have already expressed their views. Disy said at the House Finance Committee on Monday that it was not in favour of a tax on market profits, while opposition Akel and Edek said a tax should be imposed.

Meanwhile, the already troubled market closed on a downward note yesterday for the second day running. The all-share index closed at 796.3, down 0.28 per cent on Tuesday with a trading volume of £21.5 million compared to Tuesday’s £21.7 million.

Trading was again down in all sub-sectors, most noticeably manufacturing, which dropped 2.56 per cent, and investment companies, which fell 1.34 per cent.

Fourteen listed companies, including the three main banks, were still not trading yesterday as a result of suspensions and voluntary withdrawals in order for the firms to settle their issue of share deeds by November 29.

However, reports yesterday suggested the banks would be back on the floor by Monday.

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