The Director General of the Ministry of Finance Giorgos Pantelis warned that with the enactment of legislation to reduce the VAT rates on fuel and electricity, the Republic of Cyprus risks entering into adventures with the European Commission, while the new postponement of sales puts the disbursement in doubt of the first installment from the Recovery and Resilience Plan.
Speaking before the extraordinary session of the parliamentary Finance Committee, which examines the impeachments, Mr. Pantelis said that the two pieces of legislation concerning the abolition of double taxation on fuel and the abolition of VAT on pollutants in the price of electricity "contrary to the Community acquis and they will lead the Republic of Cyprus to new adventures". He recalled the Commission's letter of July 27 which characterizes the two pieces of legislation as "problematic" and requests the correction of the situation on the basis of the Community acquis.
He reminded that the Government has taken measures with a total impact of €350 million (including the latest subsidies to cover the new increases in the price of electricity), adding that with the two pieces of legislation there will be a new impact of over €100 million, which it will reduce public revenues in a period of economic slowdown, affecting the ability of the Republic to exercise social policy thereafter.
Disbursement is at risk
With reference to the law on the new postponement of sales, Mr. Pantelis said, among other things, that the suspension in question "leaves no room for the application of the new legislative framework recently passed by the Parliament regarding the strengthening of the supervision framework of credit management companies". which was the 14th milestone for submitting the request for the first disbursement from the Recovery and Resilience Plan (RESP) of €85 million.
"In essence, it makes the framework in question unapplicable and the suspension in question will be evaluated by the European Commission, as part of the evaluation of milestone 14 and whether we have achieved the milestone in question," he said, adding that during the evaluation it may to consider that the said suspension affects the effectiveness of the said framework and the implementation of the SAA meaning the disbursements of the Plan".
MPs expressed disagreement with the interpretation given by the Ministry of Finance to the Commission's letter. AKEL has already stated that it will reject the impeachment, while members of the committee other than DISY left spikes against the impeachments.