The opposition proposes, the government accuses…- Article by Stefanos Stefanou Stefanou, General Secretary of the Central Committee of AKEL

 

9 August 2022

When last September AKEL made representations for measures to be taken to combat the problem, the government, via the Minister of Finance, replied that the phenomenon is temporary and there is no need for for measures.

When AKEL came back on the issue in October – on the occasion of the crisis in grain prices – proposing specific measures to address the situation, the government responded with promises, but without taking any substantive measures.

In December, when AKEL tabled a proposal in Parliament to reduce VAT on electricity from 19% to 9%, which was approved with only the ruling party DISY opposing it, the government accused the opposition of engaging in populism. The President of the Republic subsequently referred the law to the Supreme Court and the matter is still pending. Furthermore, consumers continue to be charged 19% VAT on their electricity bills.

The government’s negative attitude to AKEL’s proposals and representations is continuous. Characteristic of this negative stand is the fact that despite the fact that AKEL has been requesting a meeting with the Minister of Finance since the beginning of July to discuss its proposal to tax the excess profits of energy companies, the Ministry has still not responded. If it had been a request from the banks, the Ministry would evidently have responded much quicker….

All this time we have not confined ourselves to these proposals. We have submitted many others, underlining the need for the formulation of a comprehensive policy to deal – as far as possible – with the issue of price increases and hikes. Proposals to contain energy costs (electricity and motor fuels), to reduce the cost of production from renewable energy sources, to control profiteering and speculation and to protect consumers, to boost the incomes of working people and low pensions, to support tourism, etc.

In Cyprus the unprecedented paradox is happening, the biggest opposition party is calling on the government to discuss measures and the government is not only refusing to do so, but is blaming AKEL omn top of all that. This is yet another negative characteristic of the DISY government.

The government argues that any measures taken on price increases should not support consumption because that increases inflation. With this approach the government is rejecting the adoption of horizontal measures and limits itself to piecemeal measures of limited scope. This approach, however, plunges a large number of our fellow citizens, who are at the bottom of the social pyramid, even further into poverty. And at a time when the threat of stagflation is more than visible, a further reduction in consumption reinforces this trend by slowing down the already problematic economic growth.

There is a lot of debate about the fiscal cost of the support measures for households and businesses. When AKEL proposes something, it always measures the fiscal cost, which it of course filters through the benefit to vulnerable groups, society and the economy. As far as the state’s ability to absorb the fiscal costs is concerned, the increased revenues that the state has, stemming from the increased prices of most goods and services, must be taken into account.

According to the Statistical Office, in the first half of the year (January – June 2022) the state has increased revenues of 690 million euros compared to the same period last year. In fact, the government has already revised its state revenue forecasts, estimating an increase of more than one billion euros. This is money that is being taken out of the pockets of taxpaying citizens because of the price increases which the government must return to society.

There could not be a better conclusion to this article than the recent statement made by the UN Secretary-General Antonio Guterres. It is immoral, says Guterres, for energy companies to be making big profits in the current energy crisis urging governments to tax excess profits for the benefit of the vulnerable groups of the population. This is exactly what AKEL is proposing to the government, but the government is not responding.

Do you imagine that the government will now be moved and act accordingly, or will they continue to turn a blind eye to the problems of the people?