December 10th, 2014 → 4:45 pm @ Aris Aristidou
Every now and then we hear about a decision or a thought for the imposition of additional burdens or curtailment of expenditure by the Government, regarding in particular the services provided. This tendency is in accord with the general philosophy of austerity imposed by Troika and the Euro group in order to combat the present economic crisis. This method reminds me of the myth of Muezzin (Hotza) and his donkey. I hope the Cyprus economy will not end up as his patient four- footed sympathetic animal!
I have already suggested that in parallel with the implementation of the Memorandum emphasis should be given to growth or restarting of the economy, as the otherwise sympathetic Minister of Finance used to call the reactivation of the economy. On another occasion I spoke about an effort to increase the denominator of the fraction of public deficit and public debt ratios, i.e. the GDP. Whereas we were encouraged that Troika at last was convinced of the need to push for the reactivation of the economy and asked for the preparation of an Emergency Plan, there was nothing on this in the last Memorandum nor did it ask to be informed on any progress made by the relevant Committee under the Vice Minister by the President. It should be noted that the Vice Minister has also undertaken the duties of the Commissioner for the restructuring of the Civil Service. How is he going to fulfill all these tasks? My suggestion in this regard was to utilize the entire services of the Planning Bureau for the Plan and the Department of Personnel for the restructuring of the Civil Service. There is no need to create additional services for these tasks.
In addition to the reactivation of the economy, which will bring not only general benefits to the Country but revenues to the Government as well, the Minister of Finance should set in his priorities other sources of revenues as well, which will not burden further the already heavily squeezed purse of ordinary citizens. Why there should have been such a delay with regard to the appointment of the Director of the strengthened Department of Inland Revenue? The filling of the post should have taken place immediately to enable the Department to contribute more towards the collection of taxes due as well as the more systematic promotion of other plans to secure more revenues for the Government. It is on this last issue that I would like to make some suggestions for consideration by the competent Services of both the Ministry of Finance and the Government.
I am wondering whether it is the time we should repeat the experiment of tax amnesty of 2003/2004? The Government of late Glafkos Clerides, as well as that of Demetris Christofias later, left behind a large public debt, despite the worthy efforts of the last Minister of Finance Takis Clerides. As the Cyprus’ accession to the EMU at that time was impeded by the bad situation of its public finances, the Government of late Tassos Papadopoulos accepted the suggestion of the Council of Economic Advisors for the introduction of temporary tax amnesty for all those repatriating their capital from abroad or they did not declare for tax purposes. The sums collected from a very small percentage of tax imposed, some hundred millions of pounds, covered fully the public deficit, reduced public debt to manageable levels and opened the way to introducing the euro. I don’t know what is the situation right now? However, my impression is that under the existing regime of free capital movement and the existing international economic turmoil since 2008, as well as the prevailing rewarding opportunities for placement of money abroad, today there must be a lot of Cypriot money abroad. Its repatriation with the above method would strengthen not only public finances but would be a source of liquidity for the banking system necessary for the badly needed financing of the economy in general.
Isn’t it the time now to promote more systematically town planning amnesty, which started in 2011 with a revision of relevant legislation to protect the individual’s rights to acquire at last title deeds, a situation which undermines the good name of the Cypriot real estate market abroad? In addition to the benefits for public finances, the speeding up of this process would help the reactivation of the construction sector and enhance employment.
Instead of the continuous conflict with the Organizations of the Public Servants and the Government shouldn’t there be a dialogue at the ignored Personnel Committees for changes in certain basic issues regarding the wider Civil Service, which would also help fulfilling the obligations undertaken for structural changes? Personally I would have started with the salary scales for first appointment to the Civil Service etc where there are no possessed rights or agreed obligations. These scales should be reduced to the corresponding levels of the market. Their attractiveness will depend on the opportunities for promotion of the good civil servants to be created. I would then continue discussing the issue regarding the inclusion of all civil servants to the earnings-related scheme, which should be improved also, the prolongation of the retirement age, the change or increase of the time of work, the adoption of interchangeability for all civil servants, old and new etc. Such measures would lead not only in savings of expenditure but also in the accumulation of a lot of money in funds under the control of the Government. The early introduction of the General Health Scheme would have the same result. The Fund to be created should be set under the control of the Government.
Dr Iacovos Aristidou