New package, the third since the beginning of the Christodoulidis administration, which includes five measures, the Minister of Finance Makis Keravnos announced today as compensation for expiration of the zero rate of fuel consumption tax at the end of the month.
In statements after the end of the extraordinary session of the Council of Ministers, Mr. Keravnos mentioned as a first measure the extension of the targeted measure of the staggered subsidy of the cost of electricity for another two billable months, in May and June. The estimated cost of this measure, he said, amounts to 5 million euros and covers more than 400,000 households and 100,000 businesses. The subsidy, he continued, covers residential consumers, vulnerable groups, commercial and industrial consumers.
As a second measure announced the extension of the zero VAT rate on basic items such as bread, milk, eggs, baby diapers, baby food, meat and vegetables, also until the end of June. The cost of this measure amounts to 6 million euros.
The third measure, said the Ministry of Finance, concerns the strengthening of family income with the targeted one-time support 3 times, in the months of May, June and July, to specific households that receive benefits from the Deputy Ministry of Social Welfare. Specifically, he said, it will concern child benefit recipients with a monthly cost of 1.2 million euros. Explaining, he said that single-parent families with an annual income of 19,500 euros and a maximum amount of deposits of 10,000 euros, will get a one-time support of 100 euros for the first child, increasing by 50 euros for each additional child and a maximum amount of 250 euros. In addition to the 4 dependent children, they will receive an additional 100 euros. From this measure, he said, 5,562 single-parent families benefit.
For families with an annual income of 25,000 euros and a maximum amount of deposits of 15,000 euros, the lump sum will be 100 euros for the first dependent child, increasing by 50 euros for each additional dependent child with a maximum amount of 250 euros. beyond 4 children, there will again be an additional amount of 100 euros. With this measure, he said, 10,233 families benefit.
Households that receive EEE, he continued, and are not included in the aforementioned categories, will receive a lump sum of 100 euros per month for three months. With this measure, he said, 17,458 households benefit.
As a fourth measure. The cost of this measure amounts to 1.3 million euros and 4,200 people will benefit.
Fifth measure, ei.e., it is the support of low-income pensioners with 100 euros per month and 28,000 low-income pensioners will benefit.
“The total package is worth 35.3 million and it benefits 400,000 household consumers and 100,000 businesses and 33,253 families, as well as 28,000 low-income pensioners.”
The Government has stated many times that the economic and social policy it follows is completely human-centered and it has been proving it in practice for a year now, he added. He reminded that so far two packages of support measures have been implemented, the first was in the amount of 196 million euros and the second, another 60 million euros.
The Ministry of Finance noted that the Government is aware of the increase in the cost of living for households, due to external factors and the geopolitical developments around us and wars, and always takes into account the fiscal conditions.
“Our priority is to announce and implement targeted measures because it has been verified many times that these targeted measures reach in time those who should, the most vulnerable, and for them we must give priority”.
In the observation that the middle class is left out, the Ministry of Finance that 400,000 household consumers and the total of consumers who benefit from the zero VAT rate include the middle classes. And the other categories that will benefit from this package belong to the middle class, he added.
In another question about criticism of the zero VAT rate, which does not seem to benefit consumers as much as it should, compared to the horizontal fuel subsidy measure, Mr Keravnos said that with zero VAT on everyday products and items of necessity, kept inflation low and fixed prices. If some people try to abuse the measures, there is strict surveillance by the competent department of the Ministry of Commerce, he added, “and some have been identified and appropriate measures have been taken.” The issue is without these measures where would the prices be”.
Fuel price
Regarding the international fuel prices and how it can lead to chain increases in the economy, Mr. Keravnos said that we should not be swayed by myths and rumors, but by the real data, not only ours, but also that of the European Statistical Service and noted that based on today’s data, on April 1 – when the zero VAT rate on fuel will not be applied – fuel prices will be significantly lower than in November 2023 when the measures were implemented.
Unleaded 95-octane petrol, he added, will be reduced by 5.3 cents a liter and diesel by 11.8 cents a litre.
In the observation that external factors are the ones that affect fuel prices internationally, Mr. Keravnos said that this is still happening today, and despite the fact that the international fuel prices are what he mentioned. He noted that the Government takes measures at specific moments by monitoring developments and will continue to do so. If fuel prices increase, he said in response to a related question, they will study the case and the Government will be ready to contribute to the relief of our fellow citizens.
He clarified that regardless of the fact that April 1st is a holiday, the abolition of the fuel subsidy and the package of measures will come into effect immediately on April 1st.
For reviews
The Government will not deal with announcements and allowances which were tested in the past by those who announce them today and created very serious problems in the economy and society, which still exist and are being faced by the current Government, said the Minister of Finance.
In a journalist’s comment that his reports are to AKEL, but also DISY expressed the position that the horizontal application of the old measures could continue because Cyprus is a country with special characteristics, the Minister of Finance said that he understands that “we are in a pre-election period and some parties make use of everything to present an almost scorched earth image. I think it was in other times when we had scorched earth and those who say these things today are not legitimized to indicate to this Government what it should do. Because it is from those that we saw, with the policies that implemented scorched earth, it is with the policies that they implemented that we saw cutting deposits and leaving the households and citizens of this place exposed.”
This Government, said the Minister of Finance, with the economic policy it implements, currently has one of the best economies in the EU, while large economies, such as German and French, are close to us, Cyprus has a growth rate of 2, 5%, reduction of inflation and is able, through balanced surplus budgets, to carry out this social policy and to announce today, the third economic package.
“Therefore no one is in a position to teach us lessons. Let those who judge the policies of this Government in this negative way first do their own self-criticism”, he stressed.
ATA
Answering other questions, Makis Keravnos said that among the measures that the Government has promoted for the benefit of the citizens is the “Photovoltaics for all” program for cheap energy, while ATA was given that others “kept the ATA for months and could not get a decision. ATA concerns all employees”.
In the observation that it does not concern everyone but 4 out of 10, the Minister stated that ATA concerns employees in the public and semi-public sector and those who have contracts in the private sector.
Asked to comment on the criticisms that with ATA the high earners benefit more, Mr. Keravnos said that serious and substantiated criticisms are welcome, that is why today the Government says that we must weigh ATA with the rate of productivity and competitiveness of the economy, but also the fact that today there is an unequal distribution of income.
KYPE