DISY seeks assistance to offset VAT on homes

IMPOSING five per cent VAT on homes places a huge economic burden on Cypriot families, DISY deputy Maria Kyriacou said yesterday.

In accordance with EU directives, the government ought to have imposed 15 per cent VAT on new buildings applying for permit after May 1.

It has been agreed, however, to adopt the alternative of five per cent on a first home, to be changed in the future to 15 per cent, but with the government stepping in and covering the cost.

Yesterday, Kyriacou said the tax-hike on houses, which were considered a vital need for Cypriot families, lowered people’s living standards “without in reality improving public finances since development in various sectors of the economy, like the construction industry, was suspended.

Kyriacou said that since the tax was an obligation the government had to uphold, she has tabled a bill providing for an equivalent reduction in land registry levies imposed during the transfer to counterbalance the five per cent VAT.

The DISY deputy also struck a note of caution in relation with Cypriot products and services competing with European products in the same market.

“If we do not plan our economy in time, unfortunately the competition, which moves very fast, will knock on our door and find it open with huge repercussions on our industry, agriculture, trade and businesses,” Kyriacou said.

She suggested lowering VAT even further as it was considered very high in relation with other European markets.

Continuous taxation increased the costs and decreased the competitiveness of Cypriot products, hindered development and at the end of the day hurt the economy and encouraged dodgy deals, Kyriacou said.

She added that keeping taxation at low levels and providing motives for technological upgrades encouraged development, increased productivity and raised people’s living standards in general.