By Elias Hazou
PARLIAMENT last night came up with a new twist to the immovable property tax (IPT) debacle, finally passing a law exempting properties valued €12,500 and under at 1980 prices, but only just.
Although the saga on agreeing a tax threshold is over, there was no lack of shenanigans in parliament. DISY and AKEL abstained en masse, passing the buck to DIKO, EDEK and the smaller parties.
The amended law passed with just 15 votes for, and a whopping 39 abstentions.
Inland revenue department (IRD) director Giorgos Poufos warned MPs on Monday that only €15 million had been collected, from the projected €130 million, ahead of the November 15 deadline.
He said the protracted discussions on the bill were stopping people from paying and could derail revenue targets set under the Memorandum of Understanding with the troika.
Under pressure from political parties, the government had withdrawn a previous bill that would have exempted property worth up to €5,000 at 1980 prices. The parties had said they would present their own amendments at yesterday’s plenum.
Some of those other proposals, voted on and rejected yesterday before the final version of the amendment was passed, included exempting property worth up to €40,000, or the first €40,000. But according to the IRD the resulting loss of revenue would have been €20m and €40m, respectively.
It was DIKO MP Angelos Votsis, who tabled the amendment increasing the taxable threshold to €12,500, saying projected government revenues from IPT would drop slightly, by only €2.7m.
At the same time, said Votsis, the measure would alleviate “financially vulnerable groups”. The MP was also confident that administrative complications from the change would be avoided, since thus far tax bills have not been sent out to this category of property owners.
The initial government bill had also provided for abolishing a minimum fee of €75 on properties falling under the taxable limit (then €5,000, now €12,500); this clause has been preserved under the law passed last night.
Under the new law , for property over and above the threshold, the taxable amount will be paid in full. For example, a property worth €12,501 will be taxed for the full value.
The taxable threshold pertains to the aggregate value of properties registered under a person. Assuming someone owns two properties, each of which are valued at €10,000, the tax payable will be calculated based on the total worth (€20,000).
The values are in 1980s prices.
In a statement issued later, ruling DISY said it could not vote in favour of the law for fear that raising the tax threshold might create a backlash from international lenders.
“Even the [prior] government bill [for a €5,000 threshold] was barely tolerated by the troika,” the statement read.
But at the same time, it added, DISY could not in good conscience vote against the bill as a whole, because that would have meant defeating the proposal to scrap the “unfair” minimum €75 fee. The party therefore decided to abstain.
Despite ironing out the taxable threshold, under the terms of the international bailout the government is still obliged to overhaul the tax system to reflect current market values as of next year.
DISY pledged to bring a comprehensive tax reform bill by December slashing the property tax rate by more than half. Party leader Averof Neophytou said the reason why the troika now expects €130m in tax revenues is because of an agreement struck by the previous administration last year that went over and beyond the call of duty.
Also yesterday, parliament passed a law giving the Cabinet the power to dismiss and appoint directors on the boards of semi-governmental organisations.
The Cabinet will now be able to replace board directors by December 31 of the calendar year during which presidential elections were held.