THE HOUSE Plenum yesterday postponed its decision on the government’s VAT tax package.
The delay means the issue will not come before the Plenum for another fortnight because of next week’s Easter break.
It was requested by the main opposition party, Akel, through its parliamentary spokesman Andreas Christou.
Twenty-two deputies from Akel, Edek, Diko and the United Democrats voted in favour of the delay, while the 17 Disy deputies present voted against the delay.
Androulla Vassiliou of the United Democrats abstained from the vote.
The package includes a two per cent hike in VAT and a number of compensatory measures to soften the blow for lower-income groups. Akel says these are not enough.
Disy parliamentary spokesman Panayiotis Demetriou said the delay could cause problems for businesses, which would have trouble adjusting in time for the planned June 1 implementation date.
He also said that the later the rise in VAT was passed, the more difficulty the government might find it to afford the compensatory measures, which might be approved before the VAT increase. The government expects to raise £62 million from the rise in VAT. Compensatory tax breaks will cost the state £47.2 million.
Christou countered that the fact that the House Finance Committee’s report on the tax bill had not been submitted to the House 48 hours before the Plenum, as required by the constitution, was reason in itself for a postponement.
And in the end deputies also agreed to delay their vote on the compensatory tax breaks.
Deputies considered that one of the measures – the plan to readjust income tax brackets – was urgent, but it was also postponed as the Committee report had not been submitted in time.
The reports on changes to income tax scales and on inheritance tax, which the government has offered to sacrifice in return for the VAT rise, were not ready, and nor was a proposal to abolish the levy paid to the CyBC through electricity bills.
The Council of Ministers on Wednesday approved the government’s tax proposals put forward by Finance Minister Takis Klerides last week.
Klerides wants to raise VAT from eight to 10 per cent. The government insists it must increase the rate of VAT to come into line with EU norms of 15 per cent. Akel says the government is hiding behind the EU to introduce policies that will hurt the man in the street.
