Opposition parties have accused the government of mishandling its response to the rising cost of living, following a recent policy reversal on zero VAT for essential goods.
Both the left-wing Akel and right-wing Disy parties expressed dissatisfaction on Friday, claiming that the administration lacked a coherent plan and was out of touch with the financial challenges faced by Cypriots.
The uproar was sparked by the government’s decision to reintroduce zero VAT on key items like baby and adult diapers, baby formula, feminine hygiene products, and fruits and vegetables, just ten days after scrapping the same measure. Normally taxed at 5%, these goods will now be exempt. The updated policy, set to be ratified by the cabinet next week and effective in November, will give retailers time to adjust prices and, unlike earlier iterations, has no set expiration date.
The opposition has been vocal about the government’s inconsistency. Akel MP Giorgos Koukoumas noted that only recently the finance ministry claimed inflation had stabilized, justifying the initial removal of the zero VAT measure. Speaking on radio Trito, Koukoumas expressed support for keeping zero VAT on essential goods but argued that it was a minimal effort compared to what’s truly needed to alleviate the cost-of-living crisis.
“This is just a drop in the ocean,” Koukoumas stated, urging for more comprehensive and targeted measures. He accused the government of lacking direction and failing to address the inflation issue properly. Akel has called for the reintroduction of electricity bill subsidies, advocating for a 9% EU-wide reduction in electricity costs, and updating social benefits, which haven’t been adjusted for inflation since 2014. The party also proposed taxing excess profits of banks to subsidize housing loan interest and revising minimum wage regulations to include Automatic Price Indexation (ATA) for low-wage workers.
Meanwhile, Disy has taken a different approach, criticizing the decision to bring back zero VAT. Party spokesman Onoufrios Koullas emphasized that the government is failing to grasp the rapidly changing economic landscape, which includes soaring inflation, rising interest rates, and escalating housing costs.
“The government doesn’t understand that we’re dealing with an unprecedented combination of economic challenges, and we need a new approach,” Koullas stated. He warned that reverting to “old bad practices” like the zero VAT policy would not be effective. Disy advocates for more targeted aid to low-income pensioners and public sector employees, particularly those in the A1 pay scale.
In defense of the policy, Viktoras Papadopoulos, head of the president’s press office, argued that the government has been closely monitoring rising prices and intervening to support vulnerable populations when necessary. He emphasized that the administration is ready to take further action if needed.
Source: cyprus-mail.com