AKEL proposals to tackle price hikes – Article by Haris Polycarpou – AKEL Political Bureau member

 

24 October 2021, ‘HARAVGI’ newspaper

Faced with a society that has begun to suffer from price increases in electricity, fuel, food and other essential goods, we have a government that does not understand – or pretends not to understand – the problem.

Whether it wants to admit it or not, price hikes are evident. The Consumer Price Index has exceeded 104 points, from the all-time high prices recorded since January 2000 when the Cyprus Statistics Service published data. The index measures the cost of living based on price changes in what we call the “household basket” and includes the main goods and services consumed by households. An increase in the index indicates that the cost of living is rising. For example, the increase in electricity is 40% and in fuel 20% compared to last year. This is a figure the government persists in denying.

However, it doesn’t take that much economic analysis for the government to admit the phenomenon. If it had the reflexes to listen to society and observe the situation in the retail sector, to reflect on the recommendations that even the European Commission is making to address the rising cost of electricity and to see what is happening at petrol stations, it would understand that the problem is does indeed exist.

There are for sure external factors that are influencing rising costs. The rising cost of transporting goods due to supply chain problems, the need to switch to more environmentally friendly forms of energy with the result that the transition costs are passed on to consumers, but also wider geopolitical tensions are having an impact on the prices of imported products in particular.

However, this is neither an alibi for the government’s failings, nor an excuse for it to remain apathetic. The government’s job is to promote solutions and take policy initiatives to address the problems society is facing.

All the more so when Mr. Anastasiades knows that electricity price increases are the result of his own failure. Namely, to bring natural gas and the absence of a comprehensive plan for renewables. He knows that he has left society unprotected in the face of fuel increases, with distortions that increase prices even higher, such as the imposition of VAT on excise duty. And of course he must not forget that his decision to dissolve the semi-governmental Cyprus Grains Commission has left the country without strategic reserves necessary to meet today’s challenges.

And if it is normal for the Anastasiades-DISY government to remain apathetic, households and businesses don’t have such a luxury, who are experiencing this harsh reality every day,

The government bears the primary responsibility for measures to be taken so as to ensure that the state provides support to households and small and medium-sized enterprises. First, to absorb part of the increased cost of living, especially for the middle and low income groups. Secondly, to strengthen the purchasing power of wages and thirdly, to protect society from the phenomena of profiteering.

AKEL has already tabled a specific proposal to reduce VAT on electricity from 19% to 9%. This is a proposal that will help not only society, but the economy too, by supporting households and small and medium-sized enterprises to meet the increased cost of electricity. At the same time, AKEL has proposed that revenues from emissions trading should be used to provide support to the vulnerable groups of the population facing increased energy and heating costs, in order to address the risk of energy poverty.

This is not the time for wishful thinking and excuses. It is the time for action because so long as the government remains inactive and merely follows developments, society is paying the bill.