As an expression of "ordinary populism", the Ministry of Finance characterizes the unanimous rejection by the parliamentary parties of the referral of the VAT law for the reduction of the VAT rate in Electricity.
In the announcement, the Ministry refers to the actions of the Government to reduce the price of electricity. As noted, the Government took the first initiative with the EAC, before any other EU Member State, and before the European toolbox guidelines were even implemented, reducing the price of electricity by 10%. It added that the government had gone even further, reducing the VAT rate for vulnerable consumers from 19% to 5% over a six-month period. Subsequently, it is reported, responding to the appeal of the Parliament, for further reduction, the Ministry of Finance proposed the horizontal reduction of the VAT rate on electricity for all household consumers from 6% to 19% for a period of 9 months.
Cyprus, the Ministry also notes, is one of the countries that have proceeded with the largest facilities and reduction of costs incurred by the consumer from the increase in electricity prices, while continuing to provide support for households to depend on electricity consumption. despite the fact that the increases in Cyprus were significantly lower than in other Member States and despite the fact that the electricity tax is one of the lowest among the EU Member States.
"Instead of assessing the position and actions of the Government, the political parties unanimously rejected the Government's referral for the passing of the Law on Value Added Tax Law 2021, for a universal and indefinite reduction of the VAT rate on electricity from 19% to 9%. A draft law, without targeting, with very significant budgetary costs ", adds the Ministry.
The proposal also mentions, extends to the perpetual, contrary to the recommendations of the European Commission, the relevant provisions of the Community VAT Directive and the obligations set out in the acquis communautaire concerning the sustainability of public finances, and the commitments of the Republic of Cyprus as member of the euro area as well as the obligations imposed by the Stability and Growth Pact. In essence, it is translating into a pollution subsidy and violating the green transition policy.
"This position can only be interpreted as an expression of ordinary populism. As the Ministry of Finance, we are not prepared to jeopardize the viability of public revenues, which proved useful both during the pandemic and for the recovery of the economy after the 2013 crisis. We also intend to safeguard its position and credibility. "Cyprus vis-.-Vis the Community institutions, which require fiscal stability from us", the announcement concludes.