The PEO sent its own positions on the government's proposals for tax reform in a letter on March 24 to the Ministry of Finance, noting that a comprehensive review and improvement of the tax system must be achieved.
According to a statement issued by the PEO today, the letter is a response to a letter from the Director General of the Ministry of Finance, George Pantelis, who requested the PEO's positions on the government's proposals.
In its letter on "Tax Reform, the PEO states that "your proposal focuses mainly on the increase in the corporate tax rate from 12.5% to 15%, and on compensatory measures that can be adopted to offset the increase in the corporate tax rate with the aim of, as you state in your letter, cost neutrality."
"Given that the last comprehensive tax reform took place in 2002 and given the large variations since then, there is a need for a comprehensive review of the tax system. There is also a need to assess the issues related to the tax-free income threshold and income tax rates."
It should be noted that the last revision of the tax-free income threshold for individuals took place on 1 January 2008, 14 years ago. Since then and until 31.12.2021, inflation has increased by 11.9 %, with the prospect of rising even more in the next 1-2 years," it adds.
The PEO states that it considers it necessary to open a broad, comprehensive debate on tax issues through a structured process of dialogue between the social partners, with the aim of achieving a comprehensive review and improvement of the tax system.
"In this context, our aim should be for tax reform to contribute to a balanced and sustainable development that serves the interests of the whole society and especially those most in need, aiming at the fairest possible redistribution of tax revenues to support the economically weakest," it notes.
In addition, it states that taking into account the objective of the green and digital transition, there is a need to discuss how to avoid measures that lead to flat taxes and indiscriminately "punish" those who are unable and cannot afford to make the green transition.
In conclusion, the PEO states that it is ready, if invited to a dialogue aimed at a comprehensive tax reform, to present concrete proposals in this direction.
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