Gov­ern­ment backs down on civil ser­vice bonus tax

Financial Mirror (Cyprus) - - FRONT PAGE -

The Coun­cil of Min­is­ters has tasked Fi­nance Min­is­ter Har­ris Ge­or­giades to re­con­sider an ear­lier decision to tax the re­tire­ment bonus of civil ser­vants and dis­cuss the mat­ter with stake­hold­ers, gov­ern­ment spokesman Nikos Christodoulides said after Tues­day’s Cab­i­net meet­ing. Pub­lic sec­tor trade unions de­clared a 24-hour strike on Fri­day to protest fur­ther cuts in salaries and the tax­a­tion of their one-off re­tire­ment, a fund that only the em­ployer gov­ern­ment con­trib­utes to.

Ge­or­giades had sug­gested tax­ing their bonus in or­der to keep pub­lic spend­ing in check, while a counter pro­posal in­cluded dis­tribut­ing the bonus tax free but over five years.

Christodoulides said that the Cab­i­net decision has taken into ac­count the need for long-term sus­tain­abil­ity of pub­lic fi­nances, en­sur­ing the pub­lic pay­roll, the pen­sions and the state’s abil­ity to support growth and so­cial co­he­sion.

“There­fore, the Cab­i­net con­sid­ers that the decision on tak­ing strike ac­tion was hasty and calls on trade unions to re­spond pos­i­tively to the invitation of the Cab­i­net, to dis­cuss the con­cerns of the Min­istry of Fi­nance in or­der to avoid un­nec­es­sary in­con­ve­nience and prob­lems that may arise from a decision taken on the ba­sis of a false im­pres­sion,” he said.

The mea­sures that Min­is­ter Ge­or­giades is ex­pected to dis­cuss with trade unions in­clude so­cial pen­sions, the ex­pan­sion of the pub­lic sec­tor’s con­tri­bu­tion to health care and the re­view of pay­ment of the one-off re­tire­ment bonus, while ex­tra­or­di­nary cuts to the pub­lic ser­vants salaries will not be per­ma­nent. The 2015 state bud­get, pre­sented to the Cab­i­net on Tues­day, takes into ac­count the fact that the Repub­lic is still in the eco­nomic adjustment pro­gramme, although there is some po­ten­tial to re­duce re­liance on the Troika bailout pack­age.

Christodoulides has said that next year’s bud­get broadly re­flects the cor­rec­tion of the pub­lic fi­nances and the need to con­tinue fis­cal con­sol­i­da­tion, while putting em­pha­sis on the pol­icy pri­or­i­ties re­lat­ing to the co-fi­nanced de­vel­op­ment projects, as well as poli­cies for so­cial co­he­sion.

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