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Cyprus Mail: News Articles in English, 01-11-07

Cyprus Mail: News Articles in English Directory - Previous Article - Next Article

From: The Cyprus Mail at <http://www.cyprus-mail.com/>


Wednesday, November 7, 2001

CONTENTS

  • [01] What does the new tax regime mean for you?
  • [02] Shares soar amid new climate of optimism
  • [03] Deputies berate CyBC for allowing staff to poison cats
  • [04] Higher phone rates come into force next month
  • [05] Ministry orders health tests for Larnaca refinery
  • [06] Government admits foreign maids underpaid

  • [01] What does the new tax regime mean for you?

    By Jennie Matthew

    IF PASSED, the government's tax reform bill unveiled on Monday will make Cyprus the lowest taxed country in Europe.

    Widespread tax breaks are likely to secure public approval. Offshore businessmen seem have been won over by the flat rate of corporate tax of just 10 per cent. Cypriot employers and businessmen are delighted by huge cut in their company tax. And even AKEL the most likely political opponents of the bill, were yesterday critical rather than vindictive, recognising the need to align with European Union directives.

    But what does the package mean for us? How will we win and how will we loose?

    _Those who earn less than 9,000

    _Raising the tax threshold from 6,000 to 9,000 will make over 50 per cent of the workforce exempt from taxation, compared to 30 per cent today.

    The government claims VAT hikes to 15 per cent are less likely to affect low income groups, who consume less and stay off the luxuries.

    _Those who earn 9,001 to 12,000

    _According to latest statistics, about 21.5 per cent of earners will pay 20 per cent income tax in the new regime compared to the current 30 per cent levy, but parliamentary opposition to the package is likely to focus on this group.

    AKEL yesterday criticised the scheme for benefiting high-income groups out of proportion with benefits for those earning around 10,000.

    Forced to approve the VAT increase because of the EU and satisfied with the gradual increase to 13 then 15 per cent, AKEL want carefully worked out benefits.

    " There is no equal treatment between a single-income household of three children on 10,000 and a single person living alone on 10,000,"said Stavros Evagorou, head of AKEL's research unit and member of the House Finance Committee.

    He singled out the country's 55,000 pensioners as a cause for concern and an independent tax expert also stressed the need for carefully worked out grants to favour mid and low-income groups.

    The government has promised that VAT revenue will be given back to the people in benefits for big families and OAPs.

    _Those who earn over 12,001

    _According to 1999 statistics, this bracket accounts for around 21.6 per cent of earners.

    This group is likely to support the package most strongly. Currently, they pay 40 per cent income tax. The new bill sets tax of 25 per cent for those earning between 12,000 and 15,000 and 28 per cent above that.

    The country's notorious tax evasion problem is centred on the high earners, who are likely to be hit hardest by VAT hikes.

    Businessmen and frequent flyers, however, will have added benefits through the huge drop in corporate tax and a total exemption from income tax for all those who spend more than 180 days off the island every year.

    _ The Economy

    _ Massive tax breaks for companies and high-income earners are likely to boost consumption and kick-start a liberalised, competition economy based on the European model.

    This will be a major break with tradition, with the Cyprus economy run on strict, centrist policies since 1974.

    Abolition of dividends tax will have a direct impact on banks and listed companies, and encourage shareholder investment.

    " This is not a social-orientated tax reform, but European-stock-business orientated,"said AKEL, adding the plan would leave large corporations " dancing and celebrating for a week" .

    Fears from the left that a flat corporate tax will encourage big mergers and squeeze small to medium sized businesses, have been discounted by independent tax experts who say listed companies are already taxed between 10 and 12 per cent.

    _Offshore Companies

    _ The increase in corporate tax from 4.25 per cent to 10 per cent was agreed precisely to keep the lucrative offshore sector in Cyprus.

    The burden of VAT will be minimal, given that many offshore services were already exempt from indirect tax.

    The government has requested from the EU that the current offshore tax law stay in place until its natural expiry date in 2011. Brussels is thought unlikely to agree to that but could accept deferral of the 10 per cent levy until 2005.

    Offshore income tax will come into line with local rates from the current half rates that are levied. But an exemption clause for those who spend 180 days out of the country each year will strongly favour the mobile expat community. The exemption also applies to Cypriots.

    The Ministry is working on a formula to compensate international businessmen for the abolition of duty free privileges in April 2003. This could include relocation and schooling allowances and refunding employers' contributions to the company.

    Nationals of countries that have reciprocal relations with Cyprus will get their social security payments automatically transferred when they return home. Others will get a refund when they leave.

    Although the companies haven't been fully de-briefed, first impressions are favourable.

    " If approved by the European Commission and passed by Parliament then I'm sure you're going to find a lot of new companies coming to Cyprus,"said president of the Cyprus International Business Association, Mehran Eftekhar.

    _The Government

    _ State revenue is likely to go up, but it's difficult to say by how much until the package comes into effect.

    The Ministry of Finance estimates that the jump in VAT from 10 to 15 per cent will give the state around 200 million a year, all of which will be ploughed back to the people in the form of direct tax cuts, increased retirement allowances and benefits to big families.

    AKEL puts the extra revenue at 300 million. The abolition of duty free privileges in April 2003 and the introduction of excise duties will rake in more millions.

    However, Finance Minister Takis Klerides' promise of tax breaks worth 78 million would leave the state a huge surplus to play with.

    The shift from direct to indirect tax should lessen the loss of income from tax evasion.

    " Unless we've made a mistake on our figures, the whole thing balances, "said permanent-secretary to the Ministry of Finance Andreas Trifonides.

    Copyright Cyprus Mail 2001

    [02] Shares soar amid new climate of optimism

    By Jennie Matthew

    COMMENTATORS went as far as to compare trading on the stock market yesterday with the heady days of 1999 as volume soared to 12.02 million and the index raked up another 3.72 per cent to close at 133.65.

    In its wake, the FTSE increased 2.52 per cent to 533.11. Upward shares outnumbered those on the downward spiral by 101:12, with 27 fixed on the even keel.

    " Investors are going absolutely nuts and buying anything that comes their way. It doesn't matter if it is fundamentally backed or not, as long as it's trading, it's bought,"wrote an analyst on the xak.com website, noting that " this kind of foolishness"contributed to the 1999 boom.

    The exchange topped gains scored on Monday when the all-share index climbed 3.32 per cent, a rise attributed to the Central Bank's 50-basis-point cut in lending and deposit rates, effective as of this week.

    Stockbroker Stavros Agrotis also attributed the upward trend to the government's unveiling of the new tax package, which favours a business, stock market orientated economy.

    Last week's announcement of the merge of Alfa and the National Bank of Greece is also having a lingering positive effect.

    " I believe a contribution of the cut in interest rates, the Greece merger and the tax package favourable to the stock exchange has resulted in the upward trend we've seen over the last few days,"he said.

    The Banks cornered 28 per cent of volume as Bank of Cyprus attracted the most trade, turning over 1.2 million to close up 1.04 per cent at 1.94.

    Cyprus Popular Bank clawed up 2.63 per cent to end at 1.56 and Hellenic increased 4.49 per cent to 93 cents.

    Otherwise the 'other' and hotel sectors dominated market capitalisation at 19.83 and 13.09 per cent respectively.

    Prominent gainers were C.C.C Holdings, up 15.45 per cent at 12.7 cents, Europrofit Capital Holdings, up 14.15 per cent at 35.5 cents, and options Casoulides, up 13.64 per cent at 22.5 cents.

    On the hotel scene, the XAK analyst pointed to Tsokkos Hotels as the day's big success story.

    The share jumped 10.52 per cent to close at 27.3 cents as 2,383,706 shares were traded.

    Even bigger percentage gains were accorded to hotel rivals Claridge Investments, up 15.38 per cent to 12 cents and Kanika, up 11.76 per cent to 19 cents.

    But the commentator pressed caution on his readers, reminding investors that cheap shares weren't necessarily synonymous with healthy investment opportunities.

    " Once again, investors should be cautious where they place their money; they should think and study companies thoroughly before investing. The wonderful week that started off yesterday is still wonderful! Will it stay like this?"he wondered.

    Copyright Cyprus Mail 2001

    [03] Deputies berate CyBC for allowing staff to poison cats

    By Melina Demetriou

    CYBC managers came under fire from deputies yesterday for allowing staff to poison stray cats on the corporation's grounds.

    Some 100 stray cats and an old dog have been loitering around the CyBC premises for years. Some members of staff take care of the strays, while others just want to get rid of them.

    CyBC director general Michalakis Stylianou admitted before the House Environment Committee convening on the matter yesterday that some employees at the national broadcaster had poisoned a number of stray cats.

    " They have invaded the place. A couple of cats once sneaked into the studios and caused 400 worth of damage. The old dog was there too jumping on the studio set,"Stylianou said. " The other day one of the cats got locked inside an office and spent the night there. People complain a lot, "he said.

    But committee chairman George Lillikas said there were no excuses for killing cats or dogs.

    " You have to find ways to solve these problems without hurting any animals. How can you expect cats to think rationally?"Lillikas asked.

    Marios Matsakis of DIKO pointed out that it was illegal to kill or even abuse cats.

    " Cyprus has signed International conventions for the protection of animals and we should all stick to them,"Lillikas added.

    Stylianou said agreed but defended those CyBC employees who had poisoned cats.

    " We have to address this problem as soon as possible because some people have threatened to stay away from work if the situation persists and some others are fighting over the cats,"he said.

    The committee rejected the CyBC's idea to take the cats to an animal shelter within the British Bases in Akrotiri, charging they might be neutered by " inexperienced medical students from Britain" .

    The House Committee decided to reconvene on the matter in a week or a fortnight to discuss the matter with representatives of CyBC employees.

    Deputies cited other cases of animal cruelty and stressed that the committee should address the issue of animal rights as a whole.

    DISY deputy Nicos Tornaritis claimed the State Veterinary Services of often " executing stray cats and dogs in cold blood without even thinking about it" .

    Matsakis added hunting dogs were sometimes abandoned by their owners in isolated areas on the mountains.

    Copyright Cyprus Mail 2001

    [04] Higher phone rates come into force next month

    By Moa Theander

    DESPITE profits of 91.4 million last year, the Cyprus Telecommunications Authority (CyTA) is putting up prices for the third time this year on December 1.

    This is the third and final part of a price re-structuring programme announced at the end of last year, which has forced consumers to shell out more money for certain CyTA services.

    The connection fee for a landline will increase by 5 to 30, and for package B subscribers the monthly cost of subscription will be raised from 4 to 5.

    Local calls will also become more expensive. From December 1, consumers will only get two minutes, not three, for two cents, at peak time.

    Internet rates will also increase. Instead of 1.3 cents for four minutes, subscribers will have to pay 2 cents for four minutes.

    The minimum " two cents per successful call"policy introduced by CyTA for package A subscribers will remain in place. This means that for every connected call you automatically pay two cents, plus the call charges.

    Asked to justify the new price increases in the face of considerable profits, CyTA yesterday pointed out that even though some rates were becoming more expensive, others were being lowered.

    The cost of intercity calls will be halved as a single rate is introduced for all national calls.

    Off peak chat will also be slashed by 50 per cent - as of December 1, consumers get four minutes instead of two for their two cents.

    CyTA officer Paris Menelaou also stressed the gradual fall in rates for international calls since August 1999.

    The cost of subscription to package A will remain the same at 1.50, as will off peak local calls - still 2 cents per four minutes.

    Since January and the beginning of CyTA's phased re-structuring, prices have jumped.

    By December 1, landline connection fees will have increased by 10 and monthly subscription rates for package B will have notched up by 2.

    Users will get half the number of minutes for two cents for peak time local calls, down from four to two minutes.

    The cost of Internet usage will also have become 0.7 cents more expensive.

    Intercity calls will have dropped 97 per cent from 3.1 cents a minute to 1 cent a minute peak and 0.5 cents a minute off peak.

    Copyright Cyprus Mail 2001

    [05] Ministry orders health tests for Larnaca refinery

    By Jennie Matthew

    THE MINISTRY of Health yesterday invited tenders for a study into the possible health effects of the Cyprus Petroleum Refinery and the Storage Tanks, satisfying the demands of a four-year campaign by the Larnaca Progressive Movement.

    Chief Medical Officer Dr Andreas Georgiou took the decision to commission the study after the movement submitted a 3,000-signature petition in April requesting a study.

    The Petroleum Refinery is keen to upgrade and develop, but Georgiou said yesterday state support would depend on the results of the study.

    The European Investment Bank pronounced the factory's $40 million investment plan economically unviable in 1998.

    " We have evidence that the refinery may be causing problems and because of the memorandum I consider it appropriate to commission a study,"he said.

    It has become impossible to isolate the refinery and storage depots from the rest of the town and there is concern that pollutants from the refinery and Volatile Organic Compounds (VOCs) emitted from the depots might be responsible for increased asthma.

    Larnaca port, to be transformed into a tourist marina by the government, is almost on top of the industrial zone. The Larnaca-Dhekhelia road and inter- city bypass run right alongside it.

    And with the town squeezed between the salt lakes to the west and the sea to the south and east, the northern stretch, where the refinery is located, has become the best area to expand and develop.

    Homes have been built right up to the refinery fence. Residents complain that their laundry gets peppered with black spots if they hang it out to dry.

    " As a movement, we very much welcome the positive move by the Ministry of Health to carry out this medical study and to proceed with concrete steps and invite tenders,"said LPM president Panicos Sardos.

    Sardos claimed there were milk and food producing outlets and pensioners' homes close to the site.

    The September explosion at a chemical plant in Toulouse in France, 3km outside the city, damaged 10,000 homes, killed 29 and injured 2,500.

    Closing date for applications is December 28, but Georgiou said tests could start as early as January 2002.

    Copyright Cyprus Mail 2001

    [06] Government admits foreign maids underpaid

    LABOUR minister Nicos Moushiouttas yesterday admitted that foreign housemaids' wages were lower than they should be.

    The minister was addressing a session of the House Human Rights Committee, convened to discuss foreign workers' problems.

    Deputies on the Committee charged that a number of foreign workers were being exploited by their employers.

    AKEL deputy Eleni Mavrou complained that foreign housemaids' salaries had not been revised for the last 13 years.

    The minister responded that housemaids were poorly paid because there were hardly any Cypriots doing the job.

    " There are no Cypriot housemaids so there is no proper regulation concerning this matter,"he explained.

    Moushiouttas said most housemaids earned 150 a month while their employers covered their accommodation, food and clothing expenses.

    Committee chairman Aristos Chrysostomides complained about " numerous cases of foreigners living and working in dire conditions" .

    Moushiouttas asked that such cases be reported to the police - " because the authorities have no way of monitoring the conditions of thousands of workers."

    The minister noted there were currently almost 30,000 foreign workers in Cyprus, one third of whom are housemaids and another third of whom work in the hotel industry.

    He said the largest group of foreign workers - 18 per cent - came from Sri Lanka, followed by Bulgarians - 7.5 per cent - and Russians - 6.6 per cent.

    Copyright Cyprus Mail 2001


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