Govt Reveals Proposed Austerity Measures

Ruling coalition parties AKEL and DIKO have revealed a package of austerity measures including abolishing a number of semi-government organisations, and revising property taxes based on 1980 values to current values, said government spokesman Stefanos Stefanou.

The measures include:

• Abolishing semi-government organisations Cyprus Milk Council, Olive Products Council and Potato Council.
• Eliminating non-essential vacant positions in the public sector.
• Reducing the number of employees in the public sector by a new policy of only one intake per four retirements, aiming to reduce civil servants by 5000 over the next five years.
• Reducing overtime by five percent in 2011 and 20 percent in 2012.
• Reducing the salaries of new civil servants.
• Starting a dialogue for the more fair distribution of Cost of Living Allowance (COLA).
• New civil servants to pay social insurance.
• Pension calculations to be based on 30-month average wage instead of last month's salary.
• Partial contributions to social insurance by existing public servants.
• Adjustment of the contribution to social insurance by widows and orphans.
• Accelerating a debate on outstanding bills to combat tax evasion and proposals from trade unions.
• Revising property rates from 1980 values to current-day values and adjusting taxes accordingly.
• New taxes on all registered companies, namely a 1000-euro per year tax for the next two years on companies that have shown profit over the last three years.
• Taxes on property for development.

The measures will be discussed with stakeholders and political parties on July 8th, said the spokesman.

The government is trying to reduce its debt to 4.5 percent of GDP, from 6.1 percent in 2010 by lowering the state payroll and raising income. If measures are not taken now, say analysts, the island risks ending up in a similar position to Greece.

But opposition party DISY MPs have warned that indiscriminate budget cutting in the public sector could have a negative impact on the already struggling national health service. Earlier this week, MP Stella Kyriakidou warned that cutting budgets in the health ministry would mean that it would be unable to meet the needs of patients.