17/10/2011 09:57
Finance Minister, Kikis Kazamias said “mea culpa” today, taking back the proposal for the imposition of 5% VAT on the private medical services, few days after its announcement.
Mr. Kazamias’ retreat – the second after the revision of the fiscal targets in few weeks only – was stated during the presentation of the state budget 2012 to the House Finance Committee.
Presenting the budget, Mr. Kazamias informed the members of the Committee that the Ministry will withdraw its intention to impose VAT on the private doctors, since this opposes to the Community Acquis.
“It was my mistake. This effort fell under the general framework for the elimination of tax evasion. I undertake the responsibility of the wrong reference for the imposition of VAT on the medical services”, he said.
“We will find other ways to stop tax evasion”, he added.
Commitments for fiscal measures
Referring to the budget 2012, he talked about the government’s commitment to take fiscal measures of €650 million, announcing – among others – the abolition of the VAT return for the first residence and the targeting of the housing benefits.
The Minister appealed for the approval of the budget since this “will contribute to regain confidence”.
He said that the budget 2012 aims to consolidation, based on the spending with the introduction of structural measures of permanent character, the significant cut of the state payroll and the operating expenditure of the state engine, the safeguard of the state pensions via the gradual increase in contributions by beneficiaries.
The measures for the cut of the state payroll include those for the drop unemployment, the reduction of the admission scales, the increase in contributions in the public sector, the drop in salaries for the next two years, the non-allocation of the COLA of the first half for 2012 and for the next 4 semesters and the abolition of the vacant job posts.
The decline in operating expenditure includes the decline in expenditure for defence and policing (€220m to €206m) and a decrease in the conferences/seminars/educations (€36m to €27m).
As for the targeting of the social plans, the Minister referred to the targeting of the children and the students benefit saving €100 million, the drop/abolition of certain state aid benefits, the abolition of the plan for the VAT return for the first residence (€55m) and the upcoming targeting of the Interior Ministry’s housing plans.
The total targets – excluding that of the VAT – reach €135 million instead of €160 million announced few days ago.
The state revenues are expected to increase by 2.8%, while the increase in spending is expected to be lower than 2% from the revised expenditure in 2011. Originally, the government talked about a 6% cut on expenditure.
With regard to the fiscal deficit, he said that if no measures were taken, it would reach 6.9% of GDP. The impact of the first package of measures stands at 1.2% of GDP and of the second at €2.9%. As a result, the deficit drops to 2.8%.
The public debt will increase to 66.6% in 2012 from 65.5% in 2011.
“Cyprus is in a crossroad with the deterioration of the external environment as well as the internal environment”, he said.
“We all have to bear the burden of adjustment – especially the wealthy classes. The political parties are urged to rise to the occasion and to vote for the budget and the fiscal consolidation measures”, he concluded.
Mr. Kazamias’ retreat – the second after the revision of the fiscal targets in few weeks only – was stated during the presentation of the state budget 2012 to the House Finance Committee.
Presenting the budget, Mr. Kazamias informed the members of the Committee that the Ministry will withdraw its intention to impose VAT on the private doctors, since this opposes to the Community Acquis.
“It was my mistake. This effort fell under the general framework for the elimination of tax evasion. I undertake the responsibility of the wrong reference for the imposition of VAT on the medical services”, he said.
“We will find other ways to stop tax evasion”, he added.
Commitments for fiscal measures
Referring to the budget 2012, he talked about the government’s commitment to take fiscal measures of €650 million, announcing – among others – the abolition of the VAT return for the first residence and the targeting of the housing benefits.
The Minister appealed for the approval of the budget since this “will contribute to regain confidence”.
He said that the budget 2012 aims to consolidation, based on the spending with the introduction of structural measures of permanent character, the significant cut of the state payroll and the operating expenditure of the state engine, the safeguard of the state pensions via the gradual increase in contributions by beneficiaries.
The measures for the cut of the state payroll include those for the drop unemployment, the reduction of the admission scales, the increase in contributions in the public sector, the drop in salaries for the next two years, the non-allocation of the COLA of the first half for 2012 and for the next 4 semesters and the abolition of the vacant job posts.
The decline in operating expenditure includes the decline in expenditure for defence and policing (€220m to €206m) and a decrease in the conferences/seminars/educations (€36m to €27m).
As for the targeting of the social plans, the Minister referred to the targeting of the children and the students benefit saving €100 million, the drop/abolition of certain state aid benefits, the abolition of the plan for the VAT return for the first residence (€55m) and the upcoming targeting of the Interior Ministry’s housing plans.
The total targets – excluding that of the VAT – reach €135 million instead of €160 million announced few days ago.
The state revenues are expected to increase by 2.8%, while the increase in spending is expected to be lower than 2% from the revised expenditure in 2011. Originally, the government talked about a 6% cut on expenditure.
With regard to the fiscal deficit, he said that if no measures were taken, it would reach 6.9% of GDP. The impact of the first package of measures stands at 1.2% of GDP and of the second at €2.9%. As a result, the deficit drops to 2.8%.
The public debt will increase to 66.6% in 2012 from 65.5% in 2011.
“Cyprus is in a crossroad with the deterioration of the external environment as well as the internal environment”, he said.
“We all have to bear the burden of adjustment – especially the wealthy classes. The political parties are urged to rise to the occasion and to vote for the budget and the fiscal consolidation measures”, he concluded.
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