FINANCE Minister Kikis Kazamias yesterday rejected criticism that the government had not introduced enough cuts in spending as opposed to taxation, suggesting that nothing can satisfy the opposition.
“If some people have their own way of calculation, it is their right,” Kazamias said. “What is important is that the government has met the obligations it assumed during the December 2 meeting.”
During that meeting, government and opposition parties agreed on a set of measures, including a two-year freeze of the state payroll and a staggered contribution from private sector workers earning over €2,500.
The measures, that must be approved by next week, also provide for a rise in VAT to 17 per cent and a rise in the defence tax from 17 to 20 per cent.
Cyprus needs to put certain measures in place by Thursday to avoid EU sanctions for fiscal violations.
Failure to pass the austerity package could also mean an EU bailout and potentially harsher measures.
Last Friday’s agreement was that spending cutbacks would outpace an increase in revenue at a ratio of 2 to 1.
But the opposition, through the DISY deputy chairman Averof Neophytou and DIKO vice chairman Nicolas Papadopoulos duo, has disputed the government’s figures.
On Thursday, Papadopoulos said the freeze did not count as a spending cut, so it could not be considered when calculating the ratio.
Kazamias rejected this position.
“We fully disagree,” he said. “Opposition representatives have not expressed satisfaction about anything. Nothing.”
Social allowances and the government’s proposal to introduce income criteria have also become a point of conflict.
Kazamias said for months the opposition was demanding from the government to better target the allowances but now they were not satisfied.
“So far, those who are not satisfied have made no solid proposal to change them,” the minister said.
On Thursday, he told lawmakers they could make changes as long as they did not affect the target, which was cutting €200 million from the €1.3 billion total, and abolish the criteria.
MPs are toying with the idea of cutting 15 per cent across the board, which Kazamias rejects because it defeated the purpose.
“This is not targeting, this is distortion,” the minister said.
For the past 15 years or so, successive government have been handing out benefits without any criteria, meaning that apart from those in need, state assistance also found its way to the well off.
Kazamias said it seemed like lawmakers were planning to propose changes during discussion of the bills in the opposition-dominated parliament, where the government would have no say.
“If this is the parliament’s choice then let them do it,” he said.
