UNIONS have agreed to zero pay rises in the state sector but expect parliament to approve tax bills so that the burden of the economic crisis is shouldered on an equal basis, it emerged yesterday.
“Workers are making a sacrifice and accept renewal of the agreements with zero increases and we expect from parliament that haves will be called to pay their share,” SEK general secretary Nicos Moiseos said after a broad union meeting.
The freeze only applies to basic wages and not adjustments to wage scales, which are off the table.
Unions implied the offer is dependent on parliament passing the government bills raising corporate tax, taxing big property owners and fighting tax evasion, which is rife in Cyprus.
“These are the conditions we set for a logical and balanced allocation of the burden of fighting the crisis,” PEO chief and AKEL deputy Pambis Kyritsis said.
The leader of the mighty public workers union PASYDY said unilateral measures will not be accepted.
Workers will not provide the solution if some of the measures are not approved, Glafkos Hadjipetrou said.
Geared at boosting a sluggish economy and raising state revenues, the government package consists of five bills: a one per cent hike on corporate tax for a period of two years; an increase in property tax to be levied on the 8,000 largest landowners; measures to crack down on tax evasion and tax avoidance; a general town planning amnesty; and a shoring up of public spending on benefits for large families and college students.
But it would be an uphill if not impossible battle for the government to pass some of the bills.
MPs from DISY, DIKO, and socialists EDEK have been critical of the government proposals and, as it now stands, the package lacks the support to pass through parliament. DISY and DIKO in particular warn that raising corporate tax would force small and medium enterprises to relocate to a more favourable tax jurisdiction.
DIKO, who are partners in the Demetris Christofias government, said yesterday that corporate tax could not be adopted by the party because it contradicts the basic principle that during a recession, no new taxes are imposed because they hurt development and worsen the investment climate.
“In addition, the increase in corporate tax would create a tendency of withdrawing investment from Cyprus and taking them to competing economies,” DIKO spokesman Fotis Fotiou said.
As regards taxing immovable property, Fotiou said his party deemed that such a measure would be more effective if it was preceded by a substantiated study with specific data and criteria from the land registry department.
DIKO thinks that such a measure could be promoted through the suitable financial climate and not under the current conditions of recession.
But Moiseos was adamant: “The position is clear and the response is that the collective agreements are renewed and it is expected the conditions we set will be respected from the other sides.”
Hadjipetrou reiterated that the biggest problem in Cyprus is tax evasion and all efforts should concentrate on tackling the phenomenon.
He said 50,000 civil servants paid some €170 million in income tax in 2008 while 73,000 self-employed people, including 30,000 company managers, paid only €81 million.
