PRESIDENT Tassos Papadopoulos officially launched his re-election campaign yesterday by pledging tax cuts and social benefits worth hundreds of millions of euros.
He said the set of commitments aimed at reinforcing the social state and the economy, as well as securing continued economic growth.
“We are not about to sacrifice the social state at the altar of the euro,” Papadopoulos said.
Based on the claim that “the government has delivered on all the promises it has made up to now,” Papadopoulos analysed 19 commitments for the economy and social welfare. He said subsequent presentations would follow the same format in tackling various issues.
Five commitments dealt with the economy, promising, among others, to slash income tax. Specifically, those who currently pay 20 per cent of their income to the taxman will pay 15, those who pay 25 per cent will pay 22 and those who pay 30 per cent will pay 28. Papadopoulos also pledged greater improvement in the standard of living and further reduction of the public deficit.
When unions and then coalition partner AKEL had raised the taxation issue early last year, Papadopoulos refused, arguing that taxes were already low in Cyprus. But last July, the government went back on its position and raised the tax-free threshold, and now it is promising further tax cuts, depriving the state of further income.
The remaining commitments addressed family issues, doubling benefits to single-parent families, reinstating a 13th salary for families with many children and introducing paternity leave.
Papadopoulos had four commitments to make to people with disabilities, including increasing benefits for the blind and the handicapped.
He also promised a rise in state pensions by the end of his next term – if he is elected in February’s poll. The remaining commitments included a 13th salary to conscripts and putting a watchdog into immediate operation to oversee the implementation of the state’s social policy.
The total annual cost of his pledges, pensions exempted, is €157 million. The pensions vary depending on how many people retire and how many qualify for each scheme, but the estimated annual cost is €355 million.
Defying warnings from financial experts, Papadopoulos said Cyprus’ Social Security Fund was “one of the most powerful funds in Europe”, and could therefore withstand the array of commitments made by his campaign, at the same time cutting taxes and increasing social grants.
Two months ago, the Central Bank Governor warned the pension fund was in urgent need of an overhaul to cope with the increase in the ageing population.
By 2050 the number of over 65s would have doubled and pension costs would reach 13 per cent of gross domestic product, Athanasios Orphanides said.
In a bid to make the fund viable, the government wants to raise the retirement age of the public and semi-state sector to 65 from 63. It is also looking at increasing contributions to the fund.
Papadopoulos said yesterday the pledges were based on the premise that “Cyprus will continue to experience continuous economic growth without endangering the economy’s stability, a prediction warranted by EU forecasts on the future state of our economy”.
The 2008 predicted surplus of gross domestic product is at 0.5 per cent, following a 1.5 per cent surplus last year.
“I am confident that, based on current evidence, these measures can be enforced without increasing taxes,” Papadopoulos predicted.
The president insisted that “the commitments should not be perceived as a bundle of measures cobbled together for electioneering purposes. I personally bind myself to seeing all 19 commitments to the end.”
AKEL leader and presidential candidate Demetris Christofias said the pledges were a clear about turn regarding social policy issues.
“Most of the announcements adopt measures that are already included in Demetris Christofias’ programme” and for some time now we tried to implement, a statement said.
Opposition DISY played down Papadopoulos’ pledges.
“After five years of governing, the outgoing president announced today a series of new promises,” DISY spokesman Haris Georgiades said. “As if the unfulfilled promises of his first term in government were not enough, he comes today to promise more.”
