DIKO AND DISY have threatened not to pass state proposed bills to help the ailing economy unless solutions are found for the economy’s structural problems first.
“If recovery measures don’t come first, we will never vote in favour of any bill that has to do with tax,” said DIKO Vice President – and Chairman of the House Finance Committee – Nicolas Papadopoulos.
The government plans to table two bills in the next few days that will revise immovable property tax for three years and introduce a special levy for all corporations – €500 for companies with a capital of below €100,000 and €1,500 for others.
Papadopoulos yesterday criticised the government for tackling the economy with a “wishy-washy” attitude. He said it continued to promote short-term solutions, with tax measures that have brought Cyprus to the verge of bankruptcy.
He warned that if measures weren’t taken to solve the structural problems, with the primary aim of regulating pensions, Cyprus would find itself in a worse position that Greece.
DISY deputy Haris Georgiades said the government was trying to fix the economy by patching up holes here and there, while he called for immediate structural measures to avoid the worse case scenarios.
He too stressed the need for an immediate resolution of the pensions’ problem, adding that by Friday, the consultations should be complete and specific proposals tabled.
Finance Minister Charilaos Stavrakis yesterday sent a letter to the House President informing him that the government planned to submit the bills by the end of the week.
This is part of a package of measures aimed at the state’s economic recovery.
Last Friday, the minister announced government plans to revise procedures followed for employment in the public sector, including the way pensions are estimated. There are also plans to adjust contributions to the Social Security Fund, as well as cancel all vacant positions in the public sector that aren’t deemed necessary.
“Intensive consultations will start with the unions over the aforementioned measures and once they are complete, the measures will be promoted immediately,” Stavrakis said in his letter.
“If in the next few days we don’t take some measures and convince the international markets that we have entered a course of economic recovery, where we will deal with the Cypriot economy’s structural problems, Cyprus is heading towards the state Greece is in today,” said Papadopoulos. “This discussion with the unions cannot continue for more than a week. Everyone should understand that they will need to make certain compromises. Things are extremely worrying.”
Papadopoulos criticised the minister for not announcing a timeframe for when consultations should end with the unions, or announcing what would happen if they decided to reject the government’s proposed measures.
“Once again he is bringing us the taxes first and we will see how to reduce the expenditures afterwards,” he pointed out. “The Finance Minister of the Cyprus Republic has led us to the verge of bankruptcy. Instead of implementing the measures, we just announce that we will discuss the measures”.
Georgiades said the government breathed “brief sighs of relief” by using logistical tricks – such as borrowing money from semi-state organisations – just so that it can afford to sort the state payroll out.
“These certainly aren’t solutions; they are just patching up any holes, dangerously so, as we have strangled the local market of any liquidity,” said Georgiades.
AKEL spokesman Stavros Evagorou accused the two parties of using blackmail to enforce their views, adding that there were measures that could be passed immediately and others that needed to be the result of an agreement with unions.
“You can’t have a problem that has been ongoing for 50 years, such as the pensions, and regulate it with a bill and impose it on the workers.”
He also accused the Central Bank governor of being to blame for Cyprus banks being exposed to the financial crisis in Greece.
He added, “In macroeconomic terms, we are in a much better position than many other states. But some are consciously hiding the exposure of our banks in Greece and the responsibility lies with the authorities that allowed our banks to expand to the extent that they expanded.”
At the same time when the Greek economy was on the downfall Cypriot banks were being encouraged to open new branches in Greece, to transfer money there and issue licenses for new banks, Evagorou said.
Referring to DIKO and DISY threatening to boycott the bills, Evagorou added: “I don’t think this blackmailing behaviour is the best way forward.”
House president Yiannakis Omirou said that the House was willing to convene to discuss the bills during its summer recess, which is due to start later this month.
