Reduction of its implementation time comprehensive tax transformation, that is, of the tax reform that is being promoted, requested yesterday President of the Republic, in a meeting he had with representatives of the project team that undertook the whole project. A group consisting of representatives of the Ministry of Finance but mainly of its representatives Center for Economic Research (KOE) of the University of Cyprus.
Based on the existing timelines and the 16 phases envisaged by the tax reform after more than 20 years since the previous one, the tax transformation project is expected to be completed in August 2025, with the finalization of the relevant legislation and the submission of the final report of the JIT which took on the project.
However, as a result of yesterday’s recommendations of the PtD to speed up the procedures, the KOE, as we are informed, undertook to consider the possibility of shortening the time for completing the project and to inform the executive power shortly. The government’s request, submitted yesterday by the President of the Republic himself, to speed up the process, was confirmed by both the Minister of Internal Affairs, Makis Keravnos, and the representative of the KOE, Giorgos Syrichas, in their statements after yesterday’s meeting that took place at the Presidential Palace.
“We have begged the University of Cyprus to intensify the pace as much as possible, so that we can have the results as close as possible”, said the Ministry of Finance specifically, reiterating that the goal is for the reform to be fiscally neutral, “to encourage business, to relieve households, to have a strong social character and to contribute to the equal distribution of income” but also to deal with any tax evasion and tax avoidance.
For his part, the economist Giorgos Syrichas, on behalf of the KEO, confirmed that the President asked as much as possible “to speed up the tax transformation and complete our work as early as possible, because he attaches great importance to this work” also mentioning that in the context of the reform, a social dialogue has also begun, which continues with the submission of various proposals. In this context and when asked about it, he confirmed that the DISY proposal for reduced taxation of family income is also being evaluated, while he also announced contacts with all the parties. It is also considered a given that in the context of the reform, the PtD’s pre-election commitment to increase the tax-free amount to 24,500 euros will be considered, as PASYDY also requests, based on the publication of the proposals it submitted to the KEO.
Green taxation will come first
Even if accelerated, the comprehensive tax transformation will follow the green tax reform, which is part of it. This was made clear, as we are informed, at yesterday’s meeting, although as we wrote the green taxes that will be accompanied by compensatory measures are now postponed until the autumn. On the matter, Mr. Syrichas mentioned yesterday that there was an exchange of views with the PtD on the green transition and green taxation, which are part of the tax transformation, while he also referred to the KOE’s assessments of compensatory measures, so that the impact of green transition to be as painless as possible for households and businesses. He recorded the importance of the green transition, in order, as he said, for the economy to remain competitive.
Specifically, he said, the cost of energy in the Cypriot economy today amounts to 40 cents per kilowatt hour, while others produce at 15 cents. The import and use of fossil fuels, he added, costs more than €1 billion, while he noted that it has been estimated that pollutants cost an additional half a billion euros a year as a burden on health.
“That’s why the green transition is key. There will be some cost, but that will be returned back to the citizen, it is not taxable. If we fall behind in the green transition we will continue to pay increasing costs,” he said.