Filenews 30 November 2021 - by Eleftheria Paizanos
The opposition is likely to eventually catch up with the government, in relation to the reduction of VAT on electricity. This is because in plenary, which this week will take place next Friday, instead of Thursday, the law proposal of AKEL, DIKO, EDEK and Ecologists for a universal reduction of VAT on electricity from 19% to 9% (without time limit) will be put to the vote. A law proposal that so far seems to acquire the majority, since, based on the party balances, it is assumed that it will be supported by the 31 MPs of the parties that propose it and it is not excluded that the 8 MPs of ELAM and DIPA will do the same.
During yesterday's session of the House Standing Committee on Finance, MPs from the parties that co-sign the bill voted in favour of promoting the proposal, the DISY MPs voted against, while the rest pledged to transfer their final positions to the Plenum.
On the other hand, the technocrats of the Ministry of Finance are preparing a bill to reduce VAT to 9% only for households (from 1 November 2021 to 31 January, 2022) and to 5% for vulnerable consumers (from 1/11/2021 to 30/04/2022). It is recalled that the bill is being prepared after the approval received by the Ministry of Finance, on the 22nd of the month, by the VAT Committee of the European Union. A competent government source told "F" that it may not be possible to table the government bill in the next plenary session of the Parliament. However, he said it would be forwarded to Parliament as soon as possible.
In case of approval of the law proposal of the opposition parties, it is considered very likely that the President of the Republic will refer the law back to Parliament, which, however, in turn will insist on its proposal, resulting in a report of the legislation to the Supreme Court.
The government will base its argument on the cost of the opposition's bill (if implemented for many months) and on the fiscal diversion caused by the loss of revenue, as this proposal does not specify the timeframe within which it will be implemented.
The co-signatories of the proposal argue that it will not have an expiry date, so that it can be adjusted according to the developments that will occur regarding electricity prices in Cyprus and the rest of Europe, but also in relation to the pandemic. The monthly cost of the government's proposals, according to the finance ministry, is estimated at €6.8 million. and the opposition at €6.5 million.
A government source told "F" that, with the government's proposals, the total cost that will arise is estimated at €25.8 million. (€15 million for households and €10.8 million for the vulnerable). However, he said, the fact that the opposition's bill is open, potentially the state many more millions. He also noted that in order to be able to reduce VAT, as proposed by the opposition, there should also be approval by the European VAT Committee.
