House digs in its heels on VAT

THE PLENUM yesterday insisted on passing the restaurant VAT bill after President Demetris Christofias refused to sign it for a second time, leading the matter to the Supreme Court.

Yesterday’s development, where the majority vote of parties except ruling AKEL – 33 MPs to 15 – voted to keep the controversial law, sets the stage for what is described as one of the most important cases of Cyprus’ political history.

The Supreme Court is set to clarify, for the first time since the Constitution was established in the ‘60s, the exact powers of the House and whether it has the right to interfere with, reduce or increase state income, above the government.

Christofias has twice sent the law – which provides a VAT decrease for all restaurants from 8.0 per cent to 5.0 per cent – back to Parliament and, under normal procedure, if Parliament rejects a second referral the matter is led to the Supreme Court.

The government claimed the law was unconstitutional as it would reduce the state’s income and interfere with budgetary policy.

The issue arose when Parliament recently passed a government bill, slashing VAT by 3.0 per cent for all hotels and tourist packages, as a means to boost ailing tourism.

Opposition DISY claimed this meant restaurant owners and locals were being discriminated against. During the plenary session, DISY MPs said a section of the public was being unfairly treated and unfair competition was being promoted at the expense of restaurateurs and in favour of hoteliers.

DIKO, EDEK and EVROKO supported the rejection, while AKEL rejected it, the party’s MPs saying such interference in a government’s budgetary policy could only lead to failure in realising its programmes and long-term effects on society.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.