Filenews 16 June 2023 - by Eleftheria Paizanou
Following DISY's disagreement on the possible non-extension of the two relief measures against high prices, namely the reduced consumption tax on fuel and the electricity subsidy, DISY submitted a proposal for a law to reduce the special defence levy imposed on interest on deposits. By law, the special defence levy is levied at 17% on dividends, 30% on interest on deposits and 25% on rents of individuals and companies resident in Cyprus.
The bill amends the law on the Special Contribution for the Defence of the Republic so that the rate of the special contribution for the defence of the Republic, of 30% levied on interest received or credited by residents in the Republic, is reduced to 17%.
In addition to the DISY parliamentary group, the bill is signed by Ilias Myrianthous of Pafos constituency (EDEK) and Stavros Papadouris of Limassol constituency (Ecologists). Apparently, the two parties are distancing themselves from the MPs.
DISY believes that the proposed law will not lose revenue to the state, as long as interest rates on deposits were negative, the benefit to state receipts from this tax was minimal.
He also estimates that with the small increase in deposit rates, the state, although taxation will be reduced due to the proposed law, will have additional revenues from previous years and at the same time the depositor will have an additional benefit, as he will pay less tax.
DISY Vice President Savia Orfanidou said the tax cut would reach the same level as the dividend tax. "The very high taxation of interest receivable on deposits was imposed due to the memorandum at a time when there were high interest rates. In recent years, depositors received zero interest and suffered severe costs," he added.
Measures under assessment
At the same time, under the microscope of the Government are the measures of reduced consumption tax on fuel and electricity subsidy, which expire at the end of the month. As stated by Government Spokesman Konstantinos Letympiotis, these measures are temporary and horizontal and are being evaluated by the government. Responding to the reactions from the parties, he noted that the issue should not develop into a political one, since for the Government the issue is first of social sensitivity and fiscal discipline.
"The Government is examining whether those reasons and data for which the decision for temporary support measures was taken, whether it concerns fuel or electricity, are currently present," he said, adding that the government will continue to maintain fiscal sobriety and introduce targeted support measures.
Concluding, he stressed that public confrontation should be avoided, sending the message to the parties that fiscal discipline should be maintained.
