Income tax revenue up 49% in Jan-Aug 2007 period

A massive 174% year-on-year increase in capital gains taxes resulting from the sharp appreciation in land prices and hefty activity in the booming real estate sector combined with healthy increases recorded in most areas of economic activity helped tax revenues sharply higher during the first eight months of the year.

Tax revenue jumped 49% YoY or CYP 245 mln to a record CYP 745.4 mln or EUR 1.27 bln in the Jan-Aug 2007 period compared to total tax revenue of CYP 500.1 mln or EUR 854.5 mln in the same period a year ago, the Inland Revenue announced.

Revenue from capital gains taxes jumped 172% to CYP 176.4 mln from CYP 64.7 mln a year ago in the eight month period. Corporate taxes also jumped by 45.7% YoY to CYP 205.8 mln compared to CYP 141.3 mln a year ago.

Pay as you earn taxes from employees was 15.7% YoY higher at CYP 160.1 mln from CYP 138.3 mln, while self-employed contributions was 28.4% higher at CYP 19.9 mln from CYP 15.5 mln previously. Property taxes were up 17% at CYP 2.9 mln, defense tax (mostly arising from the 10% tax on deposits) was up 28.6% at CYP 130.5 mln from CYP 101.5 mln while increases were also reported in stamp duty, up 53.4% at CYP 28.2 mln, contributions up 11.5% at CYP 17.6 mln and others up 84% at CYP 4 mln.

The ability of the government in raising revenue from increased economic activity without resorting to new taxes while restraining cost increases has been instrumental in lowering the fiscal deficit and the public debt.