CB against new taxes

The imposition of new taxes to the Cyprus citizens in an attempt to give solutions to the problems encountered by the island’s economy, would be a serious mistake and “a stab in the back” for the economy, a CB high ranking official told StockWatch on Monday.

The CB official has recommended the Finance Ministry to avoid the imposition of taxes and proposed a number of measures to confront the problems of the Cyprus economy.

First, he recommended the decline in fiscal deficit, which contributes to the increase in public debt, which in turn, contributes to the balance of current accounts deficit. Second, inflation, which has increased by 5% of the VAT within the period of six months, and third, the public debt which was shot at 60% due to the increase in the fiscal deficit.

“The imposition of new taxes under the current condition would be an inexcusable mistake. The government could proceed to the imposition of taxes following the development recovery”, the CB official added.


The solution would be…


A promising solution would be the drastic cutback in non-productive sectors – non productive expenditure, the CB official said, stressing that he wouldn’t like to reveal the sectors, where the government could proceed to this act.

“I do not reckon that the government should proceed to the cutback of “regular expenditure”, which concern salaries, power, telephony etc. This would save CYP 8 – 10 million, that is, 1/6 of the 1% of the fiscal deficit”, he concluded.