Cyprus Mail 16 October 2024 - by Jonathan Shkurko
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| (Photo: Christos Theodorides) |
A few days after the government’s unexpected decision to reintroduce zero VAT on six categories of products, reversing a previous plan to end the measure aimed at tackling rising prices, the coalition parties Diko, Edek, and Dipa submitted proposals for additional support measures.
The decision to reintroduce zero VAT follows significant public outcry over the rising cost of living, which has put pressure on households across the country.
Finance Minister Makis Keravnos said there will be zero VAT on diapers for infants and adults, baby milk, female hygiene products, fruit and vegetables.
The decision is expected to be ratified by the cabinet next week. It’s understood, however, that the zero VAT on the designated items will likely kick in at the start of November – giving shops time to adjust their prices.
During a meeting on Tuesday with the Undersecretary to the President Irene Piki, party officials presented their suggestions to curb rising costs, while expressing their dissatisfaction at not being informed about both the termination and reinstatement of the zero VAT measure.
Furthermore, they criticised the government’s insistence on ending electricity price subsidies and were reportedly displeased with the absence of Keravnos, although, according to Philenews, he had not been invited to the meeting with Piki.
A separate meeting between Keravnos and the heads of Diko, Edek, and Dipa is planned for next week, where they will also discuss the presentation of the state budget to parliament.
During the meeting, the minister will likely outline the government’s plans for social support measures.
During the meeting with Piki on Tuesday, the parties’ representatives were informed that new measures will be announced once the government completes its evaluation. They also received assurances that their proposals will be cost-assessed by government technocrats and will be discussed between President Nikos Christodoulides and Keravnos.
Diko has put forward 14 specific proposals, which include targeted electricity subsidies and other measures aimed at supporting vulnerable groups and the middle class.
Among their suggestions is a four-month reduction in VAT on electricity bills from 19 per cent to 5 per cent from December 1 to March 31, 2025, or alternatively suspending VAT on fuel adjustment charges.
The party also proposed one-off payments to the unemployed, adjustments to child benefit income thresholds, and reductions in fuel taxes for heating oil in rural areas.
Dipa, on its part, suggested that the special tariff for vulnerable electricity consumers should be funded by the state, not consumers, and proposed the reintroduction of broad electricity bill subsidies during the winter and summer months.
Finally, Edek proposed a continuation of the tiered electricity subsidy system.
Later on Wednesday, the president of the Consumers Association Marios Drousiotis said that food prices are rising at a significantly higher rate than other products, adding that “while inflation may have decreased, prices remain high”.
Drousiotis also said that increases in fuel prices have begun and are expected to continue throughout the week.
“Various reports indicate that inflation has fallen, which is true. However, this does not mean that prices have decreased, as they seem to remain at the elevated levels seen in previous months,” he said.
He added that the only difference with the decrease in inflation is that prices are now rising more slowly than in the past month.
“Nonetheless, prices are still unmanageable for a significant portion of the population, which is suffering as a result.
“The most evident increases are affecting foodstuff, which is a basic necessity for consumers. It is increasing at a faster rate than other categories, and this significantly impacts consumers.”
On energy, Drousiotis said that there seemed to be no immediate or medium-term relief in sight regarding electricity prices.
