THE debate over government plans to raise some €270 million in two years continued yesterday, with the finance minister rejecting opposition criticism that the measures were not enough to shore up the economy.
To raise the cash, the government wants public sector workers to contribute €70 million and plans to impose a €1,000 levy on all companies operating in Cyprus.
Public service unions appear to agree with the government proposal that provides for contributions from all government workers according to their salary.
Those with gross salaries of around €1,500 will not have to contribute.
Organisations representing big businesses also seem to agree to the levy though smaller businesses have voiced disagreement.
Finance Minister Charilaos Stavrakis said the government, unions and employers have agreed on a package of measures and “I think everyone should welcome this big agreement that solves fiscal problems and is in the right direction to resolve structural problems”.
Opposition DISY said the measures essentially served the interests of 17 per cent of the workforce and a small number of companies, ignoring the overwhelming majority of private sector workers and small and medium businesses.
Government partners DIKO, yesterday said “piecemeal measures are not enough even if they were in the right direction”.
The company levy was slammed by smaller businesses as being unfair, while accountants voiced concern that it could hurt Cyprus’ image abroad if it appears the island is changing its favourable tax system.
Teachers’ unions have also expressed reservations for the state workers’ contribution.
Public sector unions will issue their final decision on the proposal on Wednesday.
Stavrakis said it was characteristic of Cypriot society to complain when their pockets were affected.
“Affected groups immediately start to protest and refuse or threaten not to pay when their financial interests are affected even by a little bit,” Stavrakis said.
“It is the same phenomenon seen in Greece for many years and you have seen where Greece ended up.”
Earlier yesterday, Stavrakis met with the Bar Association to discuss practical ways to implement the company levy.
Chairman Doros Ioannides said it was essential not to create any problems with companies but recognized the need to raise funds.
The government is toying with the idea of imposing the levy through the company registrar.
“The aim of economic policy is to select those measures that have the least effects.
“And it is exactly for this reason that we feel this proposed measure … will not cause significant side effects,” the minister said.
The government said only those companies that have shown profits in the past three years will pay the levy.
