The government doesn’t have the necessary political will to adopt a reduced VAT rate of 9% on electricity

Statement by AKEL MP Aristos Damianou after the session of the Parliamentary Finance and Budget Committee

15 November 2021

We are all witnessing very significant increases in electricity charges. This is an issue affecting the whole of Cypriot society, vulnerable groups, households and small and medium-sized businesses, but also economic activity in general.

That is precisely why, taking into account the very sharp price increases, the chain effects on the increase in the prices of consumer/essential goods, we took the initiative, as the AKEL Parliamentary Group, and tabled a draft bill for the reduction of VAT on electricity from 19% to 9%. This proposal is also fully in line with the European Commission’s communication, but also with more general guidelines to alleviate the existing problems caused by the covid-19 pandemic.

Unfortunately, despite the fact that AKEL’s proposal is supported by the vast majority of parties that are also co-sponsoring it in the Parliamentary Finance Committee, the government has not even today surprised us positively. Citing a number of erroneous arguments, it has in fact generated negativity. And it is evident that there is no necessary political will on the part of the government to adopt this proposal.

We express our regret, but at the same time we express our determination, next week, to finish the discussion, so that the proposal can be brought before the plenary of the House of Representatives, at least by a majority, In order to provide this opportunity to the Cyprus economy, for purposes of protection and development. Above all, however, for the purpose of mitigating the economic impact on households and small and medium-sized enterprises. We have decided on a number of other measures which will be announced in the course of the year.

The argument that because the proposal is universally applicable, that is to say that the rich will also be covered by it, can only be considered as laughable. There are about a million people in Cyprus. The vast majority are not rich. It would be up to the government to come up with a targeted proposal, not for those it terms as vulnerable, who it says amount to fifteen thousand, but for the overwhelming majority of our fellow citizens, who have been suffering in recent years because of the price hikes and the increases in the price of electricity.

Therefore, the government could have included this proposal in its demands from the European Commission, as it will submit the demand for the 5%, reduced VAT, only for the vulnerable groups of the population. Unfortunately, right now the numbers of vulnerable groups and people are a great deal more than the fifteen thousand suggested and I dare say that they are the majority of the Cypriot people.