Cyprus Mail
Property

Abolition of municipal and communal tax

CYPRUS, being a member state of the Council of Europe and having signed the European Charter of Local Self-Government is bound by its provisions and is obliged to take steps for its immediate application. The European Charter aims to safeguard that local authorities constitute one of the main foundations of a democratic system and that the right of the citizens to participate in the local affairs is a recognised democratic principle.

The existence of local authorities with real responsibilities and financial resources can provide effective administration close to citizens, contributing to the construction of a Europe based on the principle of democracy and decentralisation of power. The European Charter provides that local authorities are entitled within the framework of the national economic policy to have their own adequate financial resources, which they can dispose freely. Part of their resources should derive from local taxes and charges, the rate of which they have the power to determine and to use them for their operation and tasks, thus having autonomy in the management of the local affairs.

The decision of the Council of Ministers to abolish the municipal and communal tax which are imposed by the local authorities contradicts the provisions of the European Charter and the obligations of Cyprus as a member state of the Council of Europe. The ministerial decision constitutes
another intervention of central government in local affairs, while at the same time the reform of local self-government is ongoing. The government,
with the aforesaid decision, aims for local authorities to be completely dependent, instead of safeguarding their decentralisation and autonomy
so that local authorities can maintain and extend their powers.

Moreover, the government did not consider it necessary to consult local authorities. The president of the Union of Cyprus Municipalities correctly expressed his disappointment at the abolition of the aforesaid taxes and that this development will create serious problems to local self-government. Furthermore, the Congress of Local and Regional Authorities of the Council of Europe’s report of local self-government in Cyprus, states the Cyprus authorities should apply adequate guarantees for the implementation of the basic principle of fi nancial adequacy of local self-government.

This principle cannot be safeguarded without a careful examination of the local needs and balancing the costs of mandatory tasks with available resources each year. Additionally, they state that central government supervision over local self-government should be limited to the legal control of the operation and regulation of the municipalities and communities. This supervision should not extend to any power to make instructions to local governments or to control effectiveness of their working or policy, since the democratic legitimacy of the directly elected local councils makes them accountable to their voters, rather than to the preferences of the central authorities. The power of the central government to give its consent for the budget of each local government must be annulled.

The legal control of financial management of local authorities provides adequate tools for the maintenance of transparency and legitimacy of public expenditure. The mechanism of granting state subsidies should be corrected and become transparent and foreseeable for local authorities. The Union of Municipalities and Communities should be consulted in the decisionmaking process. The government should reexamine the abolition of the taxes, as well as its control over local authorities, since it contradicts the provisions of the European Charter; by doing so local authorities will have a substantial role in the conduct of local affairs.

George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, coucounis. [email protected], www.coucounislaw.com

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