THE GOVERNMENT yesterday sought to defuse the row over its proposal to revalue Immovable Property Tax (IPT) after days of claims and counterclaims muddied the picture of who would actually be affected by the move.
While trying to clarify yet again what it all means, Interior Minister Neoclis Sylikiotis yesterday admitted the proposal was a “work in progress”. He repeated however that fewer than two per cent of landowners would be affected. Currently IPT is charged on a sliding scale to land or property, which was worth €170,000 (CY100,000) in 1980.
The state wants to up the value to current market rates and set a ceiling of €1 million. The measure is intended to realise an extra €80-100 million annually in state revenues by targeting an estimated 2,000 owners of large amounts of land valued at more than €1 million, which the government says is hardly taxed or not taxed at all. Sylikiotis said: “The 98.7 per cent of land-owners who are not being taxed today will also not be taxed under the initial proposal for taxing immovable property”.
He added that the Land Registry would “formulate specific proposals in the coming weeks” which would then be finalised and tabled by the Finance Ministry for discussion by the political parties and social partners. Part of the problem appears to be that the original idea outlined by Finance Minister Charilaos Stavrakis a week ago did not contain enough specifics to dispel doubts and prevent speculation as to its content and intention. Subsequent clarifications, including those offered by Stavrakis and Sylikiotis in a joint press conference on Monday, seemed to change the parameters of what the final proposal might be.
But speaking on CyBC radio on Tuesday morning, DIKO Vice-President Nicholas Papadopoulos said that the government’s clarifications were “unfortunately, not satisfactory”. “For the last couple of weeks we (DIKO) have been trying to understand what the government is proposing to do – what the proposal is, what the objective is, and how this will be implemented,” he said.
Papadopoulos said that the 1980 law governing the taxation of immovable property already called for a review of property values every five years, so no additional legislation was needed for it to happen now, and the government was therefore “confusing people” by “talking about new taxation”.
“When the Finance Minister says he is minded to bring in a new methodology for taxing immovable property, we understand from this that he means something extra will happen, in addition to a revaluation of land so that (taxable) property values will be raised from their 1980 levels to levels approaching current prices”, he said. Papadopoulos also suggested that the proposal had not been included in the Finance Minister’s briefing to DIKO representatives two weeks ago, and that the government partner had had to find out about it through the media.
Referring to “confused proposals and uncertainty” from the government, Papadopoulos criticised it for its “lack of a serious approach” to help an ailing economic sector. “Every day we are hearing different things, but the basic issue is this: we have a property sector that is facing serious problems because of the economic crisis. We then have the Finance Minister – on behalf of the government – come out with an improvised measure, and we hear them discuss their ideas in public, in general and vague terms, without a specific basis for the proposals or a specific question being put to us for discussion.
This does not allow us to understand what they have in mind, and by proceeding in this way they provoke greater uncertainty, more confusion and more problems for a sector of the economy that is facing the biggest problems of all.” Papadopoulos said: “Right now we are talking about two different things: it is one thing to revalue land, and quite another – according to what both the Finance Minister and Interior Minister told us (on Monday) – for certain rich businessmen to be taxed.
“If land is revalued, all of us who own immovable property will be taxed, so everyone will be affected – not just businessmen, the two per cent of the population referred to by the Interior Minister, but every family which owns a plot of land.”
Sylikiotis specifically contradicted this point yesterday, restating the government’s intention that fewer than two per cent of landowners will be affected. However, a separate measure to review 1980 rateable values currently being implemented by the municipalities may have added to the confusion.
Perhaps blurring the lines between the two measures, Sylikiotis had drawn a parallel during Monday’s press conference between the government’s proposal to review taxable property values and the municipalities’ measure, which will likely result in increased local taxes for many people. During a live interview on CyBC’s evening news on Tuesday, he clarified the difference between the measures and then repeated the justification that it was unfair for the owner of a house to be paying more rates than the owner of a neighbouring apartment-block simply because the land on which the apartment-block had been built was a vacant plot in 1980. Government spokesman Stefanos Stefanou said on Tuesday that the government’s proposal “seeks to correct a distortion in the valuation of land that has existed for many years and only affects the big landowners.” Stefanou said that “to date, not only has the government not introduced (new) taxes; rather, despite the significant reduction in revenues, it has reduced taxation.”
He added that the proposal under discussion would affect “just a small number of around 1.3 per cent of landowners, in other words the big landowners”, and not 90 per cent of the population “as suggested misleadingly by (DISY Vice President) Averof Neophytou”. Sylikiotis suggested on Monday that the severe criticism voiced by opposition party DISY was designed “to kill a measure before any discussion even takes place.” DISY leader Nicos Anastassiades chose not to respond to the government’s counter-attacks on Tuesday.
Instead, he emphasised that “especially now, any new taxation will weigh on the already-stagnant market and will harm the already-vulnerable competitiveness of our economy, bringing with it a new wave of unemployment.”
