
UNTOLD HISTORY: Did Cyprus collect taxes by law, or was this prevented by legislation between 1960 and 1964?
Taxes were imposed with required stamps
So yesterday I posted "UNTOLD HISTORY: How many times did vetoes block Cyprus from passing bills/laws between 1960-1964? The answer is different from what many thought."
And we read out of 249 laws and bills 1 vetoed 2 defeated in parliment.
Many pointed that one of the bills which couldn't pass was about fiscal policy (collection of taxes).
And we have been told that Turkish Cypriots abused their veto power, and authorities couldn't even collect taxes, and the state couldn't function.
My grandmother had a presidential pension by Makarios's direct executive decree during that time because she received an honorary title awarded to mothers who give birth to and raise 10.
This made me wonder how on earth she received periodic pensions in those days. It wasn't coming from a pension fund in the colonial budget. So I looked at the official bills what laws were active and what fiscal laws were passed or blocked. Here is the real Untold Story:
TLDR:
According to the Constitution, Communal Chambers collected taxes from the respective community.
The state had separate taxes, like import/export customs bills and taxes collected with stamps, which were printed by the state and sold.
The bill, which was defeated in parliament regarding the separation of powers by a simple majority(50%+1), was meant to change the constitution to take TAX collection from communities to the state.
Customs taxes were collected by the state until the current bill's expiration date; then Makarios used executive orders, and taxes continued to be collected until the Supreme Court declared this executive power unconstitutional and against the law.
TC legislature pushed for the implementation of existing laws, such as municipal and communal state appointment ratios.
TC legislature offered a new customs bill; during disagreements on the bill, customs tax collection for foreigners passed unanimously from the parliament.
Makarios ordered the disregard of Supreme Court decisions.
Neutral President of the Supreme Court, Ernst Forsthoff, realized the rule of law had collapsed. He resigned in protest in April 1963.
For contex:
Belgium couldn't form a Government for 652 days due to a severe regional political impasse and separation of powers, driven by deadlocked linguistic and coalition negotiations between December 2018 and October 2020.
Most recent EIU Democracy Index: Belgium ranked #10 globally; Cyprus ranked #36 globally.
DETAILS:
Republic of Cyprus Constitution 1960:
Article 87(1): The Communal Chambers shall, in relation to their respective Community, have competence to exercise... legislative power solely with regard to the following matters:
...
(f) the imposition of personal taxes and fees on members of their respective Community in order to provide for the respective needs and for the matters necessary of execution which are within the competence of the Communal Chamber.
- Exclusive Jurisdiction: The tax was strictly personal and could only be imposed by a Chamber on individuals belonging to its own ethnic community.
- Earmarked Spending: The revenue generated from Article 87 taxes was constitutionally confined to financing the spheres managed by the Chambers: religious matters, education, culture, and courts handling personal civil disputes (such as marriage and divorce)
The Republic of Cyprus (RoC) did collect import and export taxes during this period.
Unified Beginnings (1960)
When Cyprus gained independence in August 1960, the new state inherited the existing British colonial customs infrastructure. Under Article 188 of the Constitution, all colonial laws remained temporarily in force. The RoC Customs & Excise Department operated uniformly across the island, employing both Greek and Turkish Cypriots to clear goods and collect import duties.
The Expiration: When the temporary extension expired in March 1961, Turkish Cypriot deputies refused to vote for another renewal. They used their veto to demand concessions on separate municipalities and the promised 70:30 public employment ratio.
Presidential Decrees: President Makarios ordered customs officials to continue collecting duties based on the expired colonial rates. The Turkish Cypriot leadership called this unconstitutional.
Official RoC financial records from 1961 confirm that millions of pounds were successfully generated through central Import Duties, Harbour Dues, and Wharfage Dues. [1]
The Supreme Constitutional Court of Cyprus (SCC), presided over by neutral German jurist Ernst Forsthoff, evaluated the tax crisis by strictly upholding the letter of the 1960 Constitution.
The Court ruled that President Makarios's attempts to bypass Parliament and collect trade and income taxes via executive decrees were unconstitutional and illegal. [1]
The Ruling: The Court declared Makarios's decrees null and void, asserting that collecting taxes under expired colonial laws via decree violated Article 24 (which required explicit legal authorization for public burdens) and directly undermined the separation of powers. [1]
Acceptance of "Foreigner Only" Laws as a Compromise (Simple majority veted yes from both communal chambers)
To salvage the state's finances legally, the House of Representatives later passed targeted bills like the Income Tax (Foreign Persons) Law and the Customs Tariff Law (No. 32 of 1961). Because these laws applied exclusively to foreign nationals and international corporations, they did not directly infringe upon the domestic rights of either community and were passed with bipartisan support. The SCC validated these specific laws because they followed proper parliamentary channels rather than executive decrees. [1]
The Consequence: The Court maintained that even if a veto resulted in a total legislative standstill, the executive could not invent temporary powers to circumvent it.
When it became clear the SCC would rule against the Greek Cypriot positions, Makarios publicly declared in February 1963 that if the Court ruled against his government, he would simply ignore its decisions. [1]
When government refused to enforce his judicial rulings, the neutral President of the Supreme Court, Ernst Forsthoff, realized the rule of law had collapsed. He resigned in protest in April 1963, effectively dismantling the supreme judicial arbiter of the island and setting the stage for the outbreak of intercommunal violence later that year. [1, 2]