Report shows lost state revenue reached €626m in 2009

THE STATE is losing hundreds of millions each year in uncollected taxes, according to Auditor-general Chrystalla Yiorkadji’s 2009 report on the finances of the state machinery.

Yiorkadji delivered the 753-page report to President Demetris Christofias yesterday. Christofias noted that it was a little less bulky than last year’s report, expressing the hope it would identify fewer problems.

The AG said the report contained “reliable, objective information” on the public sector and local authorities on which policy decisions could be taken.

According to the report, the Inland Revenue Department collected €1.31bn in taxes last year compared with €1.35bn in 2008.

The state lost millions, however, in uncollected taxes, as a result of failing to implement proposals made last year by the AG on tax evasion, the re-evaluation of immoveable property and capital gains tax.

By the end of 2009, lost revenue for the state amounted to €626m compared with €580m for 2008, showing an increase of eight per cent. Yiorkadji highlights that included in the above sum for 2009 is €74m owed by various Church foundations. “It has transpired that this sum is incorrect and its revaluation has been requested from the department,” said the AG’s report.

The report also highlights that the re-evaluation of immoveable property which began in 1980 and ended in 1992 failed to provide a mechanism for the constant re-evaluation of property in the event of more buildings being erected in the area or zones changed, resulting in significant loss of revenue for government and local authorities.

Yiorkadji points to property sales as a third area where potential revenue is slipping through the net. She notes that in many property sales, the sale price registered is lower than the actual sale price, in an effort to avoid paying the full capital gains tax due.

Her office estimates that from 2000 to 2009, the state lost €362m in revenue as a result.

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