In a leaked confidential letter to President Christofias, the Cyprus Finance Minister has admitted that steps taken to accelerate the issue of Title Deeds have not added a single Euro to the state's coffers.
Charilaos Stavrakis, the Cyprus Finance Minister has presented a package of measures which include raising 80 to 100 million Euros from taxes on property next year as part of the Government’s overall plans to get the Cyprus economy back on track.
According to reports, Cyprus tax revenues slumped during January - November 2009 and the fiscal deficit increased to more than 3% of the island's Gross Domestic Product, which means total losses during the period exceed €500 million.
Compared to previous months, the number of non-Cypriots buying property in November improved slightly. But as December is normally the quietest month for property sales, it seems unlikely that the total number of properties sold to foreigners will exceed 1,900 this year.
Reports suggest that the Cyprus banks are restructuring unpaid loans to avoid them having to be classified as ‘non-performing’ as required under the Basel II Accord.
The drop in Cyprus tax revenue collections is entirely attributable to the collapse of the property market and it raises concerns that if foreign demand fails to recover, the government will lose a significant source of revenue permanently.
