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Cyprus

Scramble to come up with IPT formula

DISY leader Averof Neophytou wants to scrap the tax

PARLIAMENT will resume discussion of a last-ditch government proposal to amend the immovable property tax (IPT) regime on Monday, as each party tabled its own proposal in Friday’s session.

In an urgent letter to parliament on Friday morning, the finance ministry withdrew its bills scrapping local-government taxes on immovable property, and lowered the state’s proposed flat IPT rate from 0.05 per cent to 0.035 per cent.

Finance Minister Harris Georgiades told the joint House finance and interior committees that this would allow local authorities to collect a total €15 million, which would have otherwise been paid to them by the government.

Under the previous proposal, the government would have collected €45 million, of which a third would go to local authorities.

Instead, the central government and local authorities will now collect €30 and €15 million respectively.

According to Georgiades, the move was the result of pressure from municipalities to keep the regime unchanged this year, as they had already set the process of levying the tax in motion.

Meanwhile, DISY leader Averof Neophytou unveiled the full details of his controversial plan to scrap IPT altogether, starting in 2017.

Earlier this week, Neophytou had caught everyone by surprise with the proposal to do away with the tax altogether, including Georgiades, who pointed out that the tax could only be scrapped if equivalent savings could be found in the government budget.

So Neophytou set out to find the necessary savings, which he tabled on Friday.

In addition to extending the retirement age for deputies and government officials by five years to 65, and a proposal for multiple pensions to only complement each other up to the maximum of the largest one, which had been announced on Thursday, Neophytou also proposed lowering the interest rate payable by the government on expropriations, reducing rent payable by the state, regulating the payment for unused leave days and pension benefits to retiring civil servants, reducing the number of municipal councillors, and regulating contributions on health insurance and provident fund for civil servants.

Neophytou’s proposal was but one of many, as each party came up with its own proposal for a new IPT regime, centring on a progressive tax, whereas the government insists on a flat tax rate.

According to the finance ministry, owners of immovable property worth up to €50,000 would not be required to pay any tax.

But opposition parties argue that a flat rate benefits large landowners and the wealthy.

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