Cyprus Mail 9 January 2022 - by CM Our View
Although the legislature was in recess for the Christmas holidays, deputies interrupted their holidays on Tuesday to attend a hastily called plenum to vote on the president’s veto of a bill, passed on December 3, that would reduce VAT charged on electricity bills from 19 to nine per cent indefinitely. This was deemed by the parties a matter of the utmost urgency that could not wait another week or two for the legislature to re-convene.
There was no real urgency and the plenum vote was nothing more than theatre for the voters, another crude attempt by the parties at pandering to voters. The parties knew very well that if they rejected the president’s veto, he would refer the bill to the Supreme Court that would take more than a year to issue a ruling, so why were they in such a hurry to vote on it? It was pure theatre, with deputies engaging in the usual populist rhetoric about protecting people’s living standards that were at the mercy of an uncaring government.
Politics have been reduced to this type of simplistic messaging, with parties showing no regard for basic constitutional principles such as the separation of powers and the executive’s responsibility to formulate tax policy on which state budget planning depends. What is even sadder was parties’ transparent attempt to outdo the government in the populist stakes. The government had cut the price of electricity by 10 per cent, with the EAC taking the hit, as the price had surged by about 40 per cent in a period of a few months. It subsequently cut VAT on household electricity bills from 19 to nine per cent for a period of three months.
This was not enough for the political parties, which approved a bill keeping the nine per cent VAT on electricity bills in place indefinitely and extending it to businesses as well. None of them had the sense of responsibility to calculate how much this would cost the state in lost revenue and whether public finances could cope with a significant reduction in tax revenue. Nor were they concerned that the bill went against the recommendations of the European Commission and the provisions of the EU directive on VAT. As the finance ministry pointed out, the bill “translated into an indefinite subsidy of emissions and contravenes the policy of green transition.”
Nothing is allowed to get in the way of the populist show put on by the legislature. On the day the plenum was held there was a meeting of the House commerce committee to discuss the other outrage – the higher charges imposed by the banks. This was also theatre for deputies to take the role of uncompromising defenders of the ordinary people by lambasting the ruthlessly greedy banks. It did not matter that, a week earlier, both the Central Bank and the finance ministry, which were being urged to intervene and stop the increase in charges, made it very clear they did not have the authority to do so.
Was it necessary to inform the parties that banks, like any profit-making businesses, had every right to set the prices for the services they offered customers without interference from the state? Were deputies not aware that we live in a market economy in which the state has no authority to tell a business what it should charge for its products or services? The state is not a business partner of the banks to have a say in their pricing policy. Only if there were grounds to suspect price collusion between banks was state intervention justified, but nobody said this was the case. But the House commerce committee held a broad meeting on Tuesday, inviting the finance minister and governor of the central bank among others to discuss bank charges; the discussion will continue this Tuesday.
Banks are an easy target for the politicians, all of whom accused them of greed, arbitrariness, intimidation and ruthlessness. Bank-bashing is a vote-winner, which is why the parties present people who refuse to repay their loans as victims of the banks. Parties are constantly trying to enact legislation to protect people that have not made a loan repayment in years and totally disregard their contractual obligations because populist thinking dictates that the banks are always in the wrong. The theatre about the bank charges is part of the same narrative.
Instead of focusing their attention on the scores of bills awaiting approval, the parties are putting on populist shows for the voters without substance or meaning. Sadly, our politics are more and more about playing to gallery, telling people what they want to hear and winning social media points, with no regard for the facts, constitutional order and reason. Instead of our political system helping cultivate political maturity it is doing the exact opposite, actively preventing our society from growing up.
