THE GOVERNMENT’S chief EU negotiator George Vassiliou yesterday suggested the government should take DISY’s tax reform proposal as well as the one tabled by opposition parties into serious consideration with a view of sealing an agreement on the matter as soon as possible.
In a joint news conference on Thursday, the emerging tri-partite opposition alliance of left-wing AKEL, social-democratic KISOS and centre DIKO put forward their proposals for a raised tax-free threshold of £10,000 per annum to compensate for the rise in VAT from 10 to 15 per cent.
Ruling DISY, which has proposed a £12,000 tax-free limit as part of its tax package, was quick to respond on the same day, saying that only five weeks ago, parliamentary committee discussion on the issue had been frozen because none of the three political parties could agree.
DISY deputy Prodromos Prodromou criticised the opposition parties for capitalising on the tax issue to boost their emerging presidential alliance. The government, which has tabled a £9,000 tax-free limit, up from the current £6,000, is being pressured by the EU harmonisation process to hike VAT and reform the island’s taxation system as soon as possible.
“The Finance Ministry should seriously consider DISY’s proposal as well as the one tabled by the three opposition parties and very soon position itself on them,” Vassiliou told reporters at the House yesterday after a meeting of the European Affairs Committee.
“An agreement could then be reached in a spirit of understanding,” he added.
Vassiliou reassured that certain provisions included in the three parties’ proposal aiming at a fairer distribution of wealth were not in contradiction with EU demands.
“The EU does not care about our social policies as long as tax reforms benefit all residents equally, the Cypriots and the non-Cypriots,” he explained. The EU insists Cyprus must revoke preferential tax rates for foreign companies.
The chief negotiator added that a possible increase of the tax-free limit from £6,000 to £10,000 or even £12,000 would also be in line with EU harmonisation.
“They don’t mind about details of this kind. The Union only expects the Parliament to approve a tax reform proposal by June and there cannot be a delay,” he stressed.
Vassiliou noted that the EU on Thursday had given the green light to Cyprus to close the tax harmonisation chapter on the basis of reforms his team had proposed to the Union.
Finance Minister Takis Klerides on Thursday reacted positively to the opposition parties’ proposal, saying it was in many ways in line with the government bill.
The three-party proposal calls for a modernisation of the system, the stamping out of tax evasion and the redistribution of wealth.
The parties argue that their proposal will bring in an additional £420 million, offset against £210 million in tax breaks.
“Our bill is also aimed at modernisation and combating tax evasion,” Klerides pointed out, nevertheless holding back from supporting the opposition proposal outright.
“We should very soon hold negotiations with DISY, AKEL, DIKO and KISOS in order to reach an agreement on tax reform. I believe the government proposal can help us reach this goal,” he said.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
