State left red-faced over Church blunder

IN WHAT appears to be a major embarrassment, the government yesterday conceded there was a mistake in the calculation of Church tax arrears, an issue which had been the focus of a bitter public spat not so long ago.
The admission came from Finance Minister Charilaos Stavrakis himself, who said the official data of the Inland Revenue Department (IRD) indicating that the Church owed €169 million — €138 million in immovable property tax and €30 million in capital gains tax, including interest – “seem to a large extent not to correspond to reality.”
Auditor-general Chrystalla Yiorkadji audited the IRD figures and found out that some sums were not representative of the actual properties involved.
“A thorough investigation should be conducted to see exactly what the Church owes and if the proper actions were undertaken by the IRD to secure what the government is owed,” Stavrakis told state radio.
It has been reported that the IRD had taxed four church institutions, which had very little  property, with up to €60 million.
In one case, the church of Ayios Georgios in Kapedes was taxed €18 million for a property worth €50,000. Similar sums were levied on three other churches.
The alleged mistakes in the calculations were made years ago.
Stavrakis said an internal investigation would be carried out to get to the bottom of the case.
Archbishop Chrysostomos, who had repeatedly refused to pay, said the mistake was known years ago.
“The head of the IRD knew, the finance ministry knew, we knew and we told them these debts were not real,” Chrysostomos said.
“The Church of Cyprus has thousands of plots. For the IRD to come and see them, evaluate them and calculate tax, it would take a few years,” the Archbishop added.
Chrysostomos urged the government to accept a deal — made with the previous administration – to settle the matter.
That deal was never tabled before the cabinet for approval at the time and the auditor-general said it was unfair to the state.
Relations between the Church and the current administration came to head earlier this year over the former’s refusal to pay the €169 million.
In what turned into a very public spat, the Archbishop called President Demetris Christofias a liar and a populist while the government spokesman retorted that Chrysostomos was a thief.

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