THE range of government measures for reducing the public deficit to below 3 per cent of gross domestic product (GDP) by 2013 will include increasing tax on petrol by six cents per litre and on diesel by eight cents per litre, it emerged yesterday.
The government’s current list of 21 measures – to be proposed to the European Commission for the period 2009-2013 under the EU’s Stability Pact – contains many proposals that have already been subject to some discussion with the political parties and the social partners, but they could still be modified in the face of resistance by public sector unions.
According to a report in yesterday’s Politis newspaper, these include: a wage freeze, pensions reform and job-cuts in the civil service; reducing entry-level pay scales for civil servants; increasing consumer taxes; and introducing some degree of means-testing for social benefits.
Measures affecting the public at large include: “compliance with EU directives” that would result in a consumer tax increase of some six cents per litre on petrol and eight cents per litre on diesel; clamping down on tax evasion; a town-planning “amnesty”; and – despite strong criticism when the idea was first floated in January – a review of property values for the purposes of taxation.
The Finance Ministry is said to intend to reduce the state payroll by some 1,000 by the time of the next presidential election in 2013 mainly by natural wastage – not filling vacated positions going forward – but also by doing away with positions that are currently vacant.
It also intends to cut back the benefits and allowances payable to civil servants and holders and public office and to reform the civil service pension scheme to allow for contributions by employees.
Speaking on Tuesday at a conference on the economy organised by the Employers and Industrialists Federation (OEV), Finance Minister Charilaos Stavrakis said that, unless measures are taken to prevent it, the public deficit – which officially reached 6.1 per cent of GDP for 2009 – will rise to 7.0 per cent this year, then 9..0 per cent in 2011, 9.5 per cent in 2012 and 10 per cent in 2013.
Similarly, he said that without corrective measures, the public debt – which reached 55.2 per cent of GDP last year, is projected to rise steadily to 80.2 per cent by 2013. According to the Politis report, the Finance Ministry believes that with the right measures it can contain the public debt to around 61 per cent of GDP in 2013.
President Demetris Christofias said yesterday that the government’s package of economic measures “is a burning question for all of us, it is a burning question for the country’s economy due to the international economic crisis. We cannot afford to be so relaxed about it – by that I mean the ordinary people, the social partners, the government and the state.”
Christofias said that the package of measures had not yet been finalised by the Council of Ministers, but it will be announced shortly, as soon as agreement is reached with the political parties and the social partners.
Commenting on the Politis article, DISY deputy Lefteris Christoforou – who is chairman of the House Commerce Committee as well as a member of the House Finance Committee – said that rather than take on its own responsibilities, the government was now “asking every household in Cyprus to pay the heavy bill for its mistakes, its shortcomings, its inadequate decisions and its mistaken economic forecasts and policies”.
AKEL spokesman Stavros Evagorou returned fire on the opposition party, accusing DISY of “daily making ruinous, destructive and unproductive criticism, without putting forward any proposals” on matters of broad economic importance.
Evagorou said that the government was doing its job, moving to make savings while at the same time continuing “to support the vulnerable layers of the population with a social state, which has been strengthened by 37 per cent since the day it took power” in terms of state aid to the vulnerable.
“This is exactly where a centre-left government shows its ability, when it can support people during a crisis, when they need it”, he added.
