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Immovable Property Tax - Inhuman and Absurd

Published on 18th May 2015

 

property taxation

IMMOVABLE PROPERTY TAX - INHUMAN AND ABSURD

The Previous Administration, in 2011 raked in €11 million from the Immovable Property Tax (IPT). In 2012 the income from the same tax shot up to €25 million.

Regarding 2013 the previous government proposed a tax hike to reach the sum of €200 million.

In the end, the new administration lowered that figure and collected €100 million for 2013 as well as 2014.

The question to be answered is abundantly clear. What kind of tax is the IPT? Why has it gone up by 10 times in just two years?

Triple Taxation

It is surely not a tax on income generated by property as properties which generate no income, like barren plots of land, are taxed as well. On the other hand properties that earn rent also pay IPR and income tax as well as the defense levy, the result being that they are in effect being triple-taxed.

It is also not a fee because it does not reflect the cost of any kind of service offered by the state to the property.

As far as the government and political parties are concerned it is a wealth tax.

Let it be clear that property owners are not by definition wealthy as they might be burdened by loans, which are sometimes larger that the value of the property itself.

Collections

The state finances are in very bad shape and the administration is trying to collect funds for the state coffers by imposing taxation, regardless of the damage they inflict on the economy.

Political parties also regard this as a wealth tax if one is to judge by their readiness and willingness to vote for it without second thoughts.

Imposing absurd taxes is the easy way out both for the government as well as the political parties. Instead of cutting back on reckless state expenses they prefer to sacrifice property owners.

Loans

Our position is clear. The IPT must not be a wealth tax because if they really wanted to tax wealth they should have taken into account the net value of these properties, bringing into the equation the loans on these properties as well. A question that begs for a convincing answer is the following: Why don’t they tax stocks, bonds, art paintings, yachts, etc if they wish to tax wealth? The probable answer is that property owners are an easy target.

Why is the taxation in question absurd and inhuman?

In addition to all the reasons already mentionedthis tax it is collected from owners who, in their vast majority do not have the ability to pay the tax.One way or another, property owners will find the cash to pay the tax being law abiding citizens. However, the result is to put another stranglehold on market liquidity and force property owners to think about selling their properties.

It is all in an attempt to collect money for the public service to blow it into the wind.

Restructuring

With all these facts on the table it becomes evident that what is needed is the restructuring and reduction of all taxes related to immovable property.

Taxes have reached prohibitive levels and are choking transactions and the much-needed real estate sector recovery.

The IPT and the municipal property tax must be incorporated and reduced to reflect the level of services, (parks, pavements, bicycle lanes, lighting, related to life quality), and the infrastructure offered to properties by the municipal authorities.

It is only then that the particular taxation will stop being inhuman and absurd and will be paid by citizens without complains.

George Mouskides

Written by: George Mouskides

General Manager, FOX Smart Estate Agency

US Certified Public Accountant,Licensed Estate Agent

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