By Constantinos Lordos
Your op-ed of July 15 (Our View: Populist IPT move a return to pre-Troika irresponsibility) came as a surprise considering that the Cyprus Mail is widely acclaimed as a very serious and rational paper.
As we all know the IPT is not a tax on income, nor even a tax on wealth. It is an insidious and selective tax hitting just property; not cash deposits, not share assets, but only property. Basically you can think of it as a confiscatory tax; repeat it over a number of years and you effectively confiscate a property asset. One could base a good case for that on Art. 12 of the Constitution.
It is also a particularly short-sighted and counter productive tax: hitting property, which has taken the most hits from the crisis, is about as intelligent as slapping a tax on incoming tourism!
Hefty taxes on properties diminish their values, hold down the mortgage value on property loans (another hit on the banks) and discourage foreign investment which, as evidenced by four years of agonising efforts by the government, CIPA, CCCI, OEB and other eager bodies came to a shade just better than naught, so far.
Your column is also taking a position on fiscal responsibility: I hope you are not referring to the current government – or the previous one!
By the Constitution only the parliament has the right to raise taxes and only the government has the right to propose spending – which the parliament must first approve. One cannot see any deviation from this basic Constitutional clause in the case of the IPT: the government asks and the parliament gives – or refuses to give! I see no “meddling”, nor any “irresponsibility” in this. It is the legal process.
As to where the government will find the money “to cover the shortfall in revenue”, as you moan, a simple answer could be to cut that part of its spending which is populist and is clearly targeting the next presidential election and get on with the job of governing responsibly and prudently. Running a government budget is not much more different from running a household budget; you have to make ends meet! Giving a government, (especially our kind of government) unrestricted access to funds is not much wiser than giving a knife to a monkey!
In our case and with the hindsight of 2012-2013, the less money we put in the hands of the government, the better-off we will be, as the four-year stint of the Troika has shown!
As for DISY and, particularly their leader, Averoff Neophytou, I would say that, given the general behaviour of parties and politicians, they stand heads and shoulders above all as far as responsible political behaviour (whatever that is!) goes. Averoff has been consistently pushing – and getting – the right policies for the country against all kinds of populist opposition. Sometimes even from the government itself!
Constantinos Lordos is chairman of the Lordos Organisation