Most European countries have been forced to implement a series of austerity measures over recent months to cut increasing budget deficits. Greece and Portugal have proposed significant cuts to public spending, whilst other nations have been forced to cut back government expenditure as well as raising tax revenues.
Cyprus is no exception. Facing a budget deficit of 5.4 per cent (against a European Union limit of 4.5 per cent), Cyprus’ Finance Minister, Charilaos Stavrakis has been forced to put forward a series of measures designed to raise the €150 million needed bring the island’s 2011 deficit to within the EU limits.
Increased property taxes one possible option
Stavrakis has put forward a number of different proposals aimed at bridging the €150 million gap. These include an increase in the Corporation Tax paid by Cypriot companies, tax increases on alcohol and cigarettes, VAT increases, public sector pay freezes and some form of bank taxation.
However, one of the most controversial proposals is to change the tax calculation system for people who own larger properties or larger plots of land.
Strong opposition to proposed property taxes
According to press reports, DIKO spokesman Fotis Fotiou has already made clear that his party will not approve the proposals that it rejected three months ago, including the taxation of property. The Government also faces opposition from major unions, including the powerful civil servants union PASYDY which recently boycotted a meeting between the Finance Minister and the unions.
Property taxes on large landowners could well filter down right through the Cyprus property sector. Those people who have bought property from ‘large landholders’ and who have yet to receive their title deeds could well see their expenses increase as developers try to minimise the impact of the new taxes.
Whether the controversial proposals will ever become law is unclear as they continue to be vigorously opposed. However, if you are considering buying in Cyprus, it is another potential cost to take into account.
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Nick Marr
I am an internet entrepreneur with a passion for driving big audiences and a love for real estate. I have had plenty of ups and downs which has given me the experience to help others launch their own businesses. I enjoy projects that save consumers time and money, challenge convention and add real value to peoples lives.