AFTER 10 days of endless haggling, a variety of proposals and crude populist grandstanding, the legislature on Thursday finally approved a sloppily improvised Immovable Property Tax (IPT) that was drafted by DISY and passed with the votes of DIKO, EDEK and Solidarity. In its final form, property owners would be receiving a 75 per cent discount on the IPT they paid in 2015, even though deputies used different wording for the bill. It stipulated payment of 25 per cent of the tax, at 1980 property values.
Property owners will be very happy with the big discount offered although it will cause problems for the finance ministry which will now have to find ways of covering the shortfall in revenue that had been budgeted. Finance Minister Harris Georgiades’ bill proposal before the House would have raised €45 million of which €15 million would have been given to the municipalities that would have in turn scrapped their own property tax.
Georgiades had told the legislature that he would happily scrap the IPT, as DISY chief Averof Neophytou initially suggested, but he wanted the parties to tell him which state spending would be cut in order to cover the shortfall in revenue.
Neophytou proposed that state pensions could be cut and rationalised, but this has as much chance of happening as introducing a six-day week in the public service. The main beneficiaries of the high state pensions, the members of our ruling elite, would never stand for such a thing.
In effect, the legislature has arbitrarily cut the government’s budgeted revenue for the year, preventing it from implementing its fiscal policy. With the assistance programme over and the Troika out of the picture we are certain to see much more of the irresponsible behaviour we witnessed in the legislature over the last 10 days, with each party behaving as the executive and formulating its own IPT proposal.
AKEL and DIKO wanted to exempt low value properties and increase the rate for higher value properties, while EDEK had come up with the ridiculous suggestion for basing the tax on the area of a property. As for DISY, initially, it proposed the scrapping of IPT, before postponing the abolition for a year and giving a 75 per cent discount for 2016 instead. As for the IPT revenue that would have funded cash-strapped municipalities, the parties have left the government to worry about that. Their expertise is reckless populism. They have no interest in concepts such as fiscal prudence and balanced budgets, especially now that the Troika is out of the way.