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Thursday, December 7, 2023

At €16 million, the impact from the reduction of the extraordinary levy for defense

The bill is expected to help increase household income, boost investment activities, encourage citizens and businesses to save and boost confidence in the banking system, according to the senior Ministry of Finance official.

The discussion of the bill that provides for the reduction of the extraordinary defense levy on interest receivable from 30% to 17% has begun in the Parliamentary Finance Committee. And while there is no disagreement on the substance of the bill, there was a dispute as to whether the bill or a similar proposal for a law previously submitted by DISY should be voted on.

On behalf of the Ministry of Finance, Senior Officer Naia Symeonidou noted that the fiscal impact of the bill is estimated at 16 million euros per year. He added that this Government measure is one of the measures, but not the only one.

He said the bill is expected to contribute to increasing household disposable income, boost investment activities, encourage citizens and businesses to save and boost confidence in the banking system.

DISY MP Onufrios Koullas wondered why the bill is needed, when the party submitted a related proposal 3 months ago and it is exactly the same. He added that the proposed law should be voted on and not the bill, since Parliament should not abdicate its right to reduce tax rates. He added that the proposed law cannot be unconstitutional, since the Parliament does not reduce the state’s income, since in recent years the state has had zero income from this interest taxation. He also noted that this is a fair measure, since the increase in the levy was a memorial provision but it is not a measure against punctuality.

On behalf of AKEL, MP Christos Christofidis questioned why, in such a situation, the Ministry of Finance prioritizes the support of depositors who have a financial capacity and not other groups of the population. He wondered whether this is intended to cover the gap in the banks’ policy and the state comes in to provide incentives for deposits when the banks refuse to raise interest rates.

ELAM MP Sotiris Ioannou said that the title of the law is incorrect, since this money ends up anywhere else except for defense. He asked for the assurance of the Ministry of Finance that after the tax reduction, not a single euro will be excluded for defense. He also wondered how this measure would increase household disposable income when interest rates are still at very low levels.

Environmentalist MP Stavros Papadouris said that the Movement also co-signed the proposed law for the repeal of a memorandum measure. However, as he said, both the bill and the law proposal are a bit communicative and he mentioned that the Ministry of Finance coming up with a bill with the same wording as the law proposal was a bit provocative, and an attempt to present measures.

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