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%. In addition to this, the Government went even further by reducing the VAT rate for vulnerable consumers from 19% to 5% for a period of 6 months. Subsequently, in response to the Parliament's call for a further reduction, the Ministry of Finance proposed the horizontal reduction of the VAT rate on electricity for all residential consumers from 19% to 9% for a period of 3 months. A proposal for a law, untargeted, with significant fiscal costs[/B]. Extended in perpetuity, contrary to the recommendations of the European Commission, the relevant provisions of the Community VAT Directive and the obligations under the acquis communautaire concerning the sustainability of public finances, and the commitments of the Republic of Cyprus as a member of the eurozone, as well as the obligations imposed by the Stability and Growth Pact. A proposal which, in essence, translates into a perpetual subsidy of pollutants and circumvents the green transition policy.
This position can only be interpreted as an expression of the usual populism. As the Treasury, we are not prepared to jeopardise the sustainability of public revenues, whose usefulness was demonstrated 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.
(MB/SX)
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