The President of the Republic requested an acceleration in the completion of the tax transformation from the Advisory Committee for the tax transformationafter the meeting held at the Presidential Palace on Thursday morning, to inform the President about the progress of the project.
In his statements after the meeting, the Minister of Finance, Makis Keravnossaid there is satisfaction that the project is progressing at a satisfactory pace, based on planning.
The goal of this tax reform, he said, is “to encourage business, to relieve households, to have a strong social character and to contribute to the equal distribution of income”. He also added that the tax reform aims to tackle any tax evasion and avoidance and will be fiscally neutral.
“We have requested the University of Cyprus to step up the pace as much as possible so that we can get the results as close as possible,” he said.
For his part, the economist George Syrichason behalf of the Center for Economic Research (CEC) of the University of Cyprus, which has undertaken to carry out the comprehensive tax transformation of the Cypriot economy, stated that the President was informed about the progress of the project and the next steps.
As he said, the first six phases of the tax transformation have almost been completed, while extensive consultations have taken place and continue to take place with various bodies of the Cypriot economy.
He also noted that the Commission exchanged views with the President on the green transition and green taxation, which are a part of the tax transformation, while they also referred to the estimates of the KEO on compensatory measures, so that the impact of the green transition is as more painless for households and businesses.
“The President shared with us how he sees the tax transformation and stated that he expects it to contribute to the competitiveness of the Cypriot economy, to be an investment-friendly system. The President stated that he expects the tax transformation to maintain social cohesion and if possible to reduce inequalities,” said Mr. Syrichas, noting that “we assured the President that the mark he has already given us is within the tax transformation , these parameters are very important and we are looking at them.”
Mr. Syrichas also said 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.” He noted that “we will try to bring it as far forward as possible”, provided that more consultations can take place with both organized groups and citizens.
They also talked about green taxes
He underlined that the tax transformation, including green transition, is very important in order 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 said, 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 health burden.
“This is why the green transition is essential. There will be some cost, but that will be returned back to the citizen, it is not taxable. If we lag behind in the green transition we will continue to pay increasing costs,” he said, noting the growing trend of foreigners who are “conscious of going to green hotels and buying green products. If we don’t change, they won’t prefer us in the future,” he said.
Asked when countermeasures are expected for green taxation, said that they are being considered and will be announced together with taxation, as a package. “It will take a little longer than we originally estimated, but exactly when will be assessed by the Ministry of Finance,” he said.
Responding to a question whether the Commission evaluates proposals such as DISY’s for taxation of family income, he answered in the affirmative, noting that it evaluates proposals from all organized groups, while meetings will also be held with the parties.
“It is a broad project, and it is good to listen to all stakeholders in order to form a comprehensive opinion. Consultations will not take place only once. When we process them and measure them, we will come back until we find out what this balanced package will be, which will help the economy for the next 20 years”, he said as, as he added, tax transformation is not done regularly. “That’s why we have to be careful”, he emphasized, noting that the JIT measures the effects of each proposal, both on public finances and on businesses, households and the economy as a whole.
He also noted, in response to another question, that although the tax reform should ensure public finances, the tax transformation is not going to be of a tax collection nature. “It will be more to improve both household and business finances and to keep the economy competitive,” he said.