PN deputy leader Mario de Marco has urged the government to re-introduce the possibility to choose between capital gains tax or a final withholding tax on the sale of property, a measure abolished in the last Budget.

He said that this measure has caused a shock to the real estate sector, and in some cases has led to situations where sellers were being taxed even though they were making a loss. Dr De Marco quoted the Federation of Real Estate Agents, the Notarial Council and the Chamber of Commerce, which all called for this measure to be scrapped.

The PN deputy leader was addressing a news conference at the party headquarters, along with Opposition spokesman Claudio Grech.

Following the last Budget every sale of property on the market for 10 years is being taxed at 10 per cent final withholding, whereas the rest are taxed an eight per cent final withholding tax. 

Dr De Marco said that this was leading to an inflation in prices as sellers wanted to recoup the increase in tax. He added that rather than tackling abuse, sellers were under declaring the price to pay less final withholding tax. In addition the fact that fiscal receipts were no longer considered in the calculation of profits, there might be more room for tax evasion, he said.

On his part, Mr Grech said that government should have at least given a transition period to allow the property sector to adjust to this measure. He added that the new tax regime had also negatively affected bond issues which had been based on profit projection from the property market.