Georgiades expects lawmakers to reform public wage bill after scrapping IPT

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By Stelios Orphanides

Finance minister Harris Georgiades said that he does not expect the discount on immovable property tax and its abolishment next year to upset the government’s budget plans, while not reforming the public wage bill could do so, and urged lawmakers to support a bundle of government draft bills.

“I hope that in September these reform bills on the reform of the public service will be approved in order to ensure that there will never again have a fiscal derailment and instead maintain the positive prospects for our economy,” Georgiades told reporters in Nicosia on Friday, according to a document emailed by the finance ministry. “It would make me feel more comfortable if the parliament’s decision (to slash and abolish the property tax) was combined with the approval of the bill regulating and setting a cap on public wage bill, linking it to the upwards performance of the economy. Otherwise, from January 1, 2017, existing legislation provides that we will revert to the old practices which included no cap on pay rises, incremental rises, hiring, and related allowances”.

The parliament’s vote on the immovable property tax on Thursday, which was based on a proposal of DISY and accompanied by a 50 per cent slashing of property transfer fees, will reduce the government’s revenue to €45m this year, which it will completely lose in 2017, compared to €100m in 2015 and €120m in 2013, the finance minister said. The government is expected to lose an additional €80m in revenue when at the end of this year an extraordinary contribution on salaries phases out, he added.

The parliament’s decision concerns only the immovable property tax paid to the central government. A similar tax, which generates a total of €30m in revenue for the local administration, which the government had proposed abolishing, remains in place.

The government initially proposed to collect a total of €45m from a unified property tax to eliminate bureaucratic procedures bothersome to the citizens, based on 2013 property values, which the parliament declined insisting on calculating the amounts due based on 1980 prices, Georgiades added.

“Prudent fiscal management and a virtually balanced budget allows today putting forward a very important tax relief for households and companies,” the minister said, reminding that Cyprus had to resort to tax hikes over the past years to deal with the consequences of budget shortfalls.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • costas

    so the government workers are going to start getting even bigger monthly pay checks

    • Slomi

      seems so.

    • Cydee

      No , I read he intends to put a curb on their pay levels/rises and pensions. (Also it was part of the EU bail-out contract).

      • Didier Ouzaid

        what bailout contract? money has been disbursed, program has been exited. What is the Troika gonna do, draft a mean interim review the next time they’re on the island?

        This thing was a heist on all counts, deposits AND eu funds. And everybody fell for it. The only solution to this is markets giving the Central gvt the middle finger and hefty rates the next time they resort to putting future generations in deeper sh*t.

      • Argent

        So it wont happen then.

    • Pc

      Their pay has been frozen over the last 4 years. But without a change in the law, the old practises will return as per 2017. This could result in annual pay increases of around 4-6%.

  • Didier Ouzaid

    ‘Otherwise, from January 1, 2017, existing legislation provides that we
    will revert to the old practices which included no cap on pay rises,
    incremental rises, hiring, and related allowances”.

    Oh, right around the time the next Presidential campaign starts?? You dont say…And he naively expects politicians and candidates to be reasonable and curb this?

    He’ll successfully teach quantum physics to a monkey before that happens.

    • Pc

      But no presidential candidate wants Bail Out II just when they have been elected. The smart thing to do would be to approve it and put it on Anastasiades’ plate when it backfires and claim the glory when it is viewed positively. It is what DIKO has been doing on some occassions.

    • Jeremy Rigg

      Didier……you made me smile with this one. But you are quite correct in your assumption .