Cyprus' Tax Reform Plans Provoke Initial Response

Lorys Charambolous, Tax-news.com, Nicosia

11 January 2001

As Tax-news.com reported yesterday, the government's plans to reform its taxation structure have now been put before parliament, but as the proposals came to light they provoked a mixed response from the opposition parties and trade unions.

In the Cyprus news MP Giorgos Lillikas of AKEL said that although he did not consider the tax reforms as 'complete' he accepted that they were not all bad but they did not benefit a large proportion of average taxpayers who were likely to suffer due to the increase in VAT and consumer taxes. AKEL will present its own package of tax reform proposals in the near future which Mr Lillikas says will be much more fair in its distribution of the country's wealth and sharing of the tax burden.

DIKO MP Stathis Kittis described the tax plans as a 'complete proposal for dialogue, there are many positive elements but these will have to be examined in depth and looked at in conjunction with other parameters deriving from the rise in direct taxes (VAT and others), so that we can establish our final position as a party.'

However KISOS MP Elias Myrianthous said the document needed some improvement as it was in parts ambiguous with some points requiring clarification but on the whole 'they seem to be well-balanced tax reforms.' General secretary of trade union PEO also picked up on the issue of 'ambiguities'. He said: 'the way it is at the moment this document does not respond to the expectations of workers and the PEO. Dialogue is required to change the general approach upon which the document has been based.'

According to general secretary Demetris Kittenis the points of contention for trade union SEK was the withdrawal of tax rebates and credits. He argued that the tax reforms did not deal effectively with tax evasion and called for more compensatory tax relief to balance the increase in consumer taxes.

DEOK general secretary Diomedes Diomedous said he was doubtful over the 'philosophy' behind the reforms. He said: 'We hope that the government will change its philosophy' before its proposals could be accepted. And Glafkos Hadjipetrou, general secretary of PASYDY, said the reforms were 'unfair' to employees. The general response from all the trade unions was that a dialogue must be set-up between them and the government to constructively discuss the proposed amendments.

Having heard the various responses to the document, House Finance Committee Marcos Kyprianou quickly reminded commentators that the Committee and parliament had yet to formerly discuss the document and added that the Committee will give the opposing political parties the right to reply in due course. He also hoped to announce whether the discourse will take place before or after the May parliamentary elections in the next few days.

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