Parliamentary opposition is mounting against the government’s tax reform proposals, with parties expressing concerns over anti-tax evasion measures they describe as “tax terrorism” and excessive powers for the Tax Commissioner.
Prospects look bleak for the government in Parliament regarding tax reform bills, as parties are reacting even before receiving the legislation. Parliament will constitute a major obstacle to government plans, with parties receiving numerous reactions from affected bodies disagreeing with both basic reform parameters and additional anti-tax evasion measures.
Some affected parties speak of tax terrorism and granting excessive powers to the Tax Commissioner, who will have the first and final say on specific anti-tax evasion measures. Beyond opposition parties, even governing coalition parties appear uncertain about supporting the legislation due to serious reservations.
Finance Minister Makis Keravnos has scheduled meetings with party leaders and financial teams to address party reservations. Initially set for Thursday 28 August, the meeting was postponed and will take place on 15 September afternoon, following the completion of public consultation on the bills.
The government will attempt to explain measures individually and their economic benefits for citizens, businesses, and state coffers. Discussion will include the €200 million gap in state revenues decided to be covered by anti-tax evasion measures.
The minister will present recommendations from the University of Cyprus Economic Research Centre, which suggested reintroducing property tax and imposing an €800 company fee.
Party leaders worry about the potential impact on the country’s attractiveness as an investment destination and believe the reform does not serve society or address the middle class whilst favouring high-income taxpayers.
Major annoyance exists over the lack of meaningful social dialogue with affected parties before preparing legislation. Tax Commissioner Sotiris Markides continues contacts seeking a consensual formula following publication reactions.
DISY leader Annita Dimitriou emphasises they do not accept necessary tax relief for the middle class and small-medium enterprises being converted into a vehicle for imposing legislative excessive powers. “Such action would undermine the favourable business environment built with effort and yielding positive results in our economy after the financial crisis,” she adds.
AKEL stresses the need to support middle- and low-income groups, arguing the reform should target fairer distribution of tax burdens. “Instead of effectively supporting middle- and low-income groups, high-income groups are favoured whilst even more taxes are loaded on low-income groups,” it states.
DIKO deputy leader Christiana Erotokritou declares tax reform necessary after twenty years without change, but emphasises the new framework must be simpler, fairer, and create stable environments for investors whilst addressing demographic challenges and protecting vulnerable groups.
ELAM expects to make final decisions mid-next month, with its economic committee processing the bills before presenting recommendations to the Political Council.
EDEK spokesman Giorgos Georgiou stated the party will position itself after completing study of all bill parameters.
DEPA MP Alekos Tryfonides said the reform does not help young people and the middle class, demanding changes to income tax and increasing tax-free allowance to €24,500.
Ecologists leader Stavros Papadouris described the bills as complex with many gaps, emphasising tax reform must serve social justice and support those needing help.