In the announcement the Ministry refers to the Government's actions to reduce the price of electricity. As noted, the Government took the first initiative together with AHK, before any other EU Member State, and even before the European toolkit guidelines were implemented, by reducing the price of electricity by 10%. It is added that the Government went even further by reducing the VAT rate for vulnerable consumers from 19% to 5% for a period of 6 months. Subsequently, it is stated, in response to Parliament's call for a further reduction, the Ministry of Finance has proposed an across-the-board reduction in the VAT rate on electricity for all domestic consumers from 19% to 9% for a period of 3 months.
Cyprus, the Ministry also notes, is one of the countries that has made the greatest concessions and reduction in the costs borne by consumers from the increase in electricity prices, while continuing to provide support for the decoupling of households from electricity consumption, despite the fact that the increases in Cyprus have been significantly lower than in other member states and despite the fact that electricity taxation is among the lowest among EU member states.
"Instead of assessing the position and actions of the Government, the political parties unanimously rejected the Government's referral for the enactment of the Value Added Tax Law of 2021, for a universal and indefinite reduction of the VAT rate on electricity from 19% to 9%. A law proposal, without targeting, with a significant fiscal cost", the Ministry adds.
The proposal further states, extends in perpetuity, contrary to the recommendations of the European Commission, the relevant provisions of the Community VAT Directive and the obligations laid down in the acquis communautaire concerning the sustainability of public finances, and the commitments of the Republic of Cyprus as a member of the eurozone and the obligations imposed by the Stability and Growth Pact. In essence, it translates into a perpetual subsidy of pollutants and circumvents the policy of the green transition.
"This position can only be interpreted as an expression of the usual populism. As the Ministry of Finance, we are not prepared to jeopardise the sustainability of public revenues, whose usefulness was proven both during the pandemic and for the recovery of the economy after the 2013 crisis.We also intend to safeguard Cyprus' position and credibility with the EU institutions, which demand fiscal stability from us."
Source: CNA
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