Filenews 28 April 2023 - Eleftherias Paizanou
DISY's proposal to continue – at 100% – the existing reduction in consumption taxes on motor and heating fuels until the end of June was adopted by all parties yesterday. Therefore, excise duties on gasoline will continue to be reduced by 8.32 cents per litre and on heating oil by 6.32 cents per litre.
The government's bill would reduce the excise tax credit to 50 percent, which would increase excise duty by about 5.4 cents a litre from May 2. However, after the inclusion of the relevant proposal in the bill, which was accepted by all parties, the tax relief will remain at the same levels, even though the Ministry of Finance considered that the stabilization of oil prices internationally justified a reduction in consumption taxes to 50%.
The amended bill was unanimously approved by Parliament and the opposition blamed the government for the intended haircut of the reduction.
Yesterday's decision of the Plenary of the Parliament is interpreted in two ways. On the one hand, the implementation of the measure of the Anastasiades Government continues, which was one of the first measures taken after the crisis in Ukraine – and specifically in March 2022 – to address the effects of the energy crisis.
On the other hand, it can also be interpreted as the first defeat of the Christodoulides government in Parliament, as it failed to form the required majority to approve its own proposal. Something he may face in other cases in the future, as the 16 votes of the co-governing parties DIKO, DIPA and EDEK are not enough to approve the government proposals.
The ruling parties were forced yesterday to follow the line of the opposition parties, as they did not want to have a political cost for their decision, as if they insisted on the government bill there would be an increase in fuel prices from May 5.
The Government does not seem to be satisfied with the Parliament's decision, as the loss of state revenue will double and rise to €12 million. A government source told "F" that the decision of the Council of Ministers provided for the reduction to be limited to 50%. He also said that the President of the Republic will wait for the opinion of the Attorney General to sign or not the law.
However, the president of EDEK, Marinos Sizopoulos, cited a decision of the Supreme Court, according to which such legislation was found to be unconstitutional, as it violated the principle of separation of powers. If the legislation is referred back and rejected by Parliament, then the President will either refer the law to the Supreme Court (so in the meantime the consumption tax will apply at 100%), or accept the decision of the Parliament and sign the law to continue for two months the current reduction.
Food
Despite the fact that the law to continue the reduction in excise duty on fuel was passed unanimously, the opposition parties lied that the first political act of the new government was to cut back on the reduction. There were also spikes in the government's intention to reduce or eliminate VAT on consumer goods. DISY MP Onoufrios Koullas said that while reducing inflation is a priority, there is no logic for the government to burden consumers to further increase the surplus in the state treasury. He also noted that he is in favour of reducing VAT on products of first demand, however, he added, what is attempted should be carefully examined and the fiscal cost evaluated. DIKO MP Christiana Erotokritou defended the government's manoeuvres, saying that there are criticisms from DISY that the amount of the VAT reduction on food is not sufficient (even before final decisions were announced), while when they were in government they did nothing about it.
Controversy between Members
The opposition called on the government to table a comprehensive package to support society from high prices and inflation. AKEL MP Andreas Kafkalias expressed his disappointment at the government's decision to cut back on fuel. He called on the Government to elaborate a comprehensive package of measures for the relief of citizens. The ELAM MP said that in no case has the situation in Cyprus improved, stressing that households are struggling.
The president of EDEK, Marinos Sizopoulos, said that in the first month and a half of the new government's government, everyone gained social sensitivity. "So many years of rule, what did they do about foreclosures, foreclosure courts and insolvencies?" he asked. On his part, MP Alekos Tryfonidis noted that it is a given that the government will submit new measures for relief from foreclosures and interest rate increases, adding that within the next few days the zero VAT on some products will be announced.
