IN A lightning move, the government yesterday slapped unsuspecting smokers with a 20-cent increase on a packet of cigarettes, introducing the first in a series of tax increases ahead of EU membership.
The hike, which took immediate effect, had been decided during yesterday morning’s Cabinet meeting.
It was unanimously endorsed by the House plenum in the afternoon, thus shooting down smokers’ last hope of not having to pay the extra 20 cents.
Though the increase took effect immediately after the Cabinet’s decision, prices would have returned to previous levels had the House voted against the rise.
Finance Minister Takis Klerides said that the government had chosen to introduce the increase in this manner to prevent profiteering.
The government also submitted to parliament two other fiscal bills, concerning VAT and company taxation. Discussion on those is expected to kick off on Monday before the House Finance Committee.
The VAT bill provides an increase on July 1 from the current 10 per cent to 13 per cent, rising to 15 per cent on January 1 2003, in line with European Union practice.
The bill concerning company taxation provides a common tax of 10 per cent for local and offshore companies.
The EU has demanded that the government eliminate preferential tax rates for foreign companies as a condition for membership.
Overseas companies are currently taxed at 4.25 per cent while local companies pay a 20 to 25 per cent corporate tax.
Klerides said legislation was expected to be approved by the House before the end of June.
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.
