Filenews 28 March 2023 - by Eleftheria Paizanou
The Ministry of Finance will proceed with the revision of the tax system of Cyprus, 15 years after the previous tax reform. The relevant ministry has only recently launched the procedures for a tax reform that will be fiscally neutral. The reform, according to the finance minister, will also include an increase in the tax-free amount. This for him will help increase the disposable income of the lowest paid classes.
According to the minister, the goal for the Government is a better and fairer distribution of income. Asked whether the tax-free income will be increased to €24,500, as promised pre-election by the President of the Republic Nikos Christodoulides, the minister refrained from taking a position, as the preparation of proposals has not yet begun. It is reminded that today the tax-free income is up to €19,500.
"The aim is for the tax reform to be fiscally neutral, but also to be an additional mechanism for better redistribution of income, for a fairer distribution of income," he added.
He referred to the need to reshape the economy, focusing on the digital and green economy. According to the finance minister, the aim should be to enrich the economy with new sectors and strengthen existing ones, such as agriculture. At the same time, Mr. Keravnos stressed that the issue of development must be separated, between GDP growth and the development of the real economy. "If growth is at high rates and satisfies us, without looking at the need to implement a redistributive mechanism so that the wealth produced is properly distributed in the economy, then we cannot talk about development, we talk about growth", adding that "growth is necessary to enter into development".
Thoughts on precision interception
Due to the prolonged increased energy costs and inflation, the Ministry of Finance left open the possibility of continuing the measures of the previous Government. That is, the continuation of the reduction of excise duties on fuel, which expires on May 4, as well as the subsidy on electricity, which expires at the end of April.
According to the Minister of Finance, these plans will be reviewed and, depending on prices and developments, the ministry will act accordingly, taking the appropriate decisions. The cost of the two projects is estimated at a total of €84 million by the end of April.
The household basket
Mr. Thunderbolt also referred to another measure to deal with inflation, which concerns the household basket. As he said, within the next 2-3 weeks the bill for the household basket will be submitted, which will be, he said, in line with the measure applied in Greece.
It is recalled, however, that a few days ago the new Minister of Energy George Papanastasiou stated that, instead of the household basket, the creation of an application on mobile phones will be promoted, through which the prices of the products that have the highest consumption will be displayed, for better comparison and choice by consumers. As it was said in the Parliament, through the digital tool, supermarkets with an annual turnover of €8 million. and above and bakeries with a turnover of more than €1 million, will deposit product prices into the app so that consumers can compare and choose where to shop from.
