ECONOMY

Government mulling single property tax

The most complicated part of the tax reform, the changes in property tax, will be submitted to Parliament immediately after the October local government elections. The timing is not accidental: Knowing that any changes in property taxation are bound to temporarily disconcert all parties involved in the market – construction firms, property owners and real-estate agents – the government wanted to avoid any criticism that might reflect badly on its preferred candidates for local government posts. The main issues of concern are whether the government will institute a single property tax to replace the multitude of taxes imposed both by central and local governments and whether it will impose VAT on sales of newly built property. The single tax is easier to institute. According to sources, Finance Ministry officials have decided that there will be a single rate for individual property owners. Corporate owners will probably be taxed at a different rate. Even though officials say it will take some time for them to prepare to administer the new tax, applying it from January 1, 2003 is not entirely ruled out. VAT is another story. To prepare for its implementation, officials say, a full register of properties must be drawn up. This last occurred in 1997.