Phase 2 of the project on green taxation and countervailing measures is currently underway, said the KOE economist and member of the project's advisory committee.
By March 2024, the first six phases of the tax transformation project assigned by the Ministry of Finance to the Economic Research Center (KOE) of the University of Cyprus will be completed and the preliminary proposals will be submitted, the KOE economist told KYPE and member of the advisory committee of the Giorgos Syrichas project.
Stating that the tax transformation project, which is expected to be completed within two years, is ongoing on the part of the KOE, Mr. Syrichas said that Phase 2 of the project regarding green taxation and compensatory measures is currently underway and he noted that estimates have already been made for the effects on households and businesses from the imposition of green taxes, for example on water, fuel and waste.
More specifically, he mentioned as an example how the impact this green taxation will have on each household depending on its income class, whether it has children and how many cars it owns is being examined. He noted that something similar is being done for businesses as well.
"These assessments have been made and based on the effects that have been identified we will proceed to determine the compensatory measures, i.e. what should be returned by the state to households and businesses to compensate for this adverse impact that they will have from green taxation ", he underlined.
Mr Syrichas explained that "the state will have revenue from the imposition of green taxation, for example on water and other services, and this revenue should be given back", as taxation should be fiscally neutral.
He added that compensatory measures could be either refunds or incentives to further accelerate the green transition (photovoltaics, subsidies for electric vehicles).
He also stated that all these assessments and proposals for compensatory measures in relation to the imposition of green taxation will soon be given to the Ministry of Finance to be promoted as it is a European obligation of Cyprus and is included in the Recovery and Resilience Fund to be implemented in 2024.
In addition, in relation to the rest of the tax reform project, Mr. Syrichas said that Phase 1 of the project, which deals with recording macroeconomic trends, and Phase 3, which deals with experiences and practices, are running in parallel at this time and are almost complete. of the EU and other countries and added that these two phases together with the ongoing Phase 4 which concerns the existing tax system of Cyprus, will be ready by March.
He also stated that Phase 5, which concerns the identification of relevant legislative regulations, has been completed, while Phase 6, which concerns empirical findings from other countries, will also be completed by March 2024.
He also said that subsequently and around the end of January to the beginning of February, bilateral consultations will be held with all the involved bodies, among which are the SELK, Pancypriot Bar Association, KBE, OEB and guilds on the progress of the work and the findings.
"All these Phases, which will be ready by March 2024, will provide the basis on which we will base ourselves to start submitting proposals on what should be done specifically in Cyprus, based on the good practices, experiences that apply in the rest of the EU countries and internationally," he added.
He said that after March, a presentation will be made to all the involved bodies on the progress of the works concerning Phase 7 of the project, and the submission of the first preliminary proposals by the KEO will follow.
Mr. Syrichas told KYPE that the submission of proposals concerns Phase 8 of the entire project, which is the evaluation and formulation of tax reform proposals.
He added that the objectives of the project are to have a new integrated tax system that, among other things, maintains Cyprus as a competitive financial center, is simple, transparent, reduces inequalities, is efficient, is friendly to economic growth and employment, foster innovation, support the transition to a green and digital economy and ensure the sustainability of public finances.
Regarding the measurement of the effects, Mr. Syrichas said that the KOE has statistical models and tools that measure any effects of either households or businesses.
Finally, he stated that for the entire project, proposals are accepted, from organized groups or from ordinary citizens, which can be submitted through the KOE website.