They are looking for a way to avoid the frontal current

The opposition insists on a universal reduction of VAT from 19% to 9% on electricity

revma kalodia OPPOSITION, electricity, proposal, VAT

The opposition insists on a universal reduction of VAT from 19% to 9% on electricity, in an effort to relieve businesses and households from the inflated EAC bills, despite the negative position it received yesterday from the Ministry of Finance.

As it seems, her discussion of the law proposal of AKEL, DIKO, EDEK and the Ecologists, which is welcomed positively by ELAM and DIPA, will coincide with the vote on the state budget for 2022, whatever that may mean. Parliamentary Finance Committee does not intend to consent to endless discussions of the proposal for VAT 9%, That is why the proposal will be taken to the Plenary Session of the Parliament, either on the 2nd or on the 9th of December. That is, on the eve of the discussion of the state budget of 2022 in the Plenary Session.

The three-day budget debate is expected to begin on 15 December and the vote is scheduled for 17 December. It is not ruled out that some of the opposition parties may link the reduction of the VAT on electricity with the attitude they will maintain in the state budget, something that the government seeks to prevent.

However, the Ministry of Finance, following an appeal by Parliament, may be forced to include in its proposals to the European Commission VAT in Brussels the reduction of VAT to 9% for electricity, so as to save time and the Republic does not need to return to the Commission after the adoption of the relevant bill. Under a European directive, VAT reductions are made after consultation with the EU. By the 17th of the month, Member States must notify the European Commission of the measures they intend to take, through VAT reductions, to support consumers due to of increasing the price of electricity.

The Republic has already sent its compensatory measures to the EU on November 9, including a 5% reduction in VAT for vulnerable consumers. In 22 months, the EU VAT Committee will meet to comment on the proposals submitted to it.

Wealthy households also benefit

During yesterday's session of the Parliamentary Committee on Finance, Senior VAT Officer Nagia Symeonidou stated that VAT cannot be used for policy, as it leads to a deviation from the government's fiscal and environmental objectives. At the same time, he disagreed with the bill, as, as he said, they send wrong messages to businesses and households, not to implement environmental goals, through energy saving. He also said that the proposal is not in line with the European Commission toolkit, which refers to targeted measures and not horizontal. According to Ms. Symeonidou, the opposition's draft law also benefits large companies and wealthy households. In addition, he said that the proposal contradicts the fiscal targets that have been set, while the VAT on electricity is already received by companies as a refund.

If the bill is approved for a universal reduction of VAT to 9%, the budget cost to the state will be € 6.5 million per month, while the year will reach € 78 million.

9% will remain at the discretion of the government

In the context of yesterday's discussion, it was reported that the VAT law gives the right to the Minister of Finance or the Council of Ministers to issue a decree amending Annex 12 of the law, to include electricity in the reduced VAT. As it was said, it will remain at the discretion of the Minister to decide whether he will finally implement the decision of the Parliament to reduce the VAT to 9% for electricity. If the specific provision applies, then DISY will also be open for discussion of the proposal. The issue will be clarified next Monday, when the bill will be re-submitted to the Finance Committee, which will meet with technocrats from the Ministry of Finance, the Tax Department, the Environment Service and the Ministry of Energy. However, during the week there will be consultations of the parties to determine the time frame for the implementation of the law. It is not ruled out that there may be behind-the-scenes consultations with the government.

The chairwoman of the Finance Committee and DIKO MP Christiana Erotokritou, stated that the goal is not to clash with the government but to find a consensual solution. AKEL MP Aristos Damianou noted that it is up to the government to submit a targeted proposal, not only for the vulnerable but for the vast majority of citizens. DISY MP Haris Georgiadis, expressing his opposition to the proposal, spoke of a leveling approach and a universal reduction of VAT.

He disagrees, but leaves a window

The Minister of Finance, Konstantinos Petridis, expressed his complete disagreement with the bill. Speaking to "F", he stated that it is unethical for the Parliament to influence public revenues. As he said, Cyprus is the 3rd country with the lowest VAT rate on electricity, noting that 23 of the 27 EU Member States have a VAT rate of 20% to 27%. According to the minister, Cyprus is one of the only countries in the EU that has made a horizontal price reduction, noting that "the EU toolbox speaks of targeting vulnerable groups of the population as we did." At the same time, he pointed out that the increase in the price of electricity is one of the lowest in the EU due to the lower dependence of Cyprus on natural gas, however, he noted that Cyprus is one of the only countries that has taken horizontal measures. In addition to, The minister noted that the horizontal reduction is socially and tax unjustly, as it will benefit both the owners and holders, whether they are individuals or companies, which during the crisis had large profits. "The horizontal reduction will be to the detriment of public finances, the expenditure of which is intended to support the vulnerable groups of the population." completed. Concluding, he said that the Government wishes to cooperate with the Parliament, guided by the interest of the economy, noting that the ministry continues to study targeted measures.

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