Cyprus Mail: News Articles in English, 02-07-03

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

Wednesday, July 3, 2002

CONTENTS

[01] House outrage at 'insulting' Akamas stance by ministers

[02] Prepare for the EU property boom

[03] Losing out to Tax Reforms

[04] Big families angry about new seat belt laws

[05] CY's second new Airbus arrives

[06] Suspected embezzler arrested and released

[07] Cyprus and Iran see bright future in joint ties

[08] Clerides and Denktash wrap up fourth round of talks

[09] New roadworthy laws

[01] House outrage at 'insulting' Akamas stance by ministers

TEMPERS flared yesterday during a House Environment Committee meeting to discuss government plans for the Akamas peninsula.

The confrontation was sparked by the refusal of ministers to brief the committee on the government's position on the issue, arguing that discussion on the Akamas would begin before the cabinet today.

Five ministers, members of a special ministerial committee tasked with studying the matter, had been called before the committee, although only three turned up.

The chair of the committee, Agriculture Minister Costas Themistocleous, told deputies he could not brief them on the ministerial committee's positions before they were heard during the cabinet meeting today.

"The cabinet should be allowed to take its decisions and then the House should judge them, enforcing the right of scrutiny provided by the constitution," Themistocleous said.

The Ministers of Finance and Communications, Takis Klerides and Averoff Neophytou, had more or less the same opinion, an attitude that infuriated deputies.

Committee Chairman George Lillikas said the ministers' attitude was insulting. He claimed that there were financial interests behind the issue and that the government was trying to bring a fait accompli before the House.

Lillikas warned the ministers that he would suggest to the plenum of the House that it reject all funds concerning any work in the Akamas that might burden the environment.

DISY deputy George Tasou said it was a "waste of time" since the ministers did not want to inform the deputies on the essence of the matter, and he asked that the session be terminated.

A clearly irritated Green deputy George Perdikis urged his colleagues to take "insulting to the legislature" ministerial behaviour under serious consideration.

The government decided in 1999 to allow "mild and controlled development" of the Akamas peninsula, one of the last virgin territories on the island.

At the time the decision was viewed with great suspicion by environmentalists and other concerned groups who claim there were business interests behind the decision.

Copyright Cyprus Mail 2002

[02] Prepare for the EU property boom

DEMAND for property has risen dramatically in the past 12-18 months, and now analysts are predicting massive increases in land and property sales once the island joins the European Union (EU).

Estate agent Antonis Loizou describes the present situation as "a great time to invest in property in Cyprus". He points to imminent EU accession and Cypriots looking to invest in alternatives to the failed Cyprus Stock Exchange as the main factors fuelling the rise in demand.

The head of the Land Survey Department, Andreas Christodoulou, said that in recent years the price of property in developed areas has shown an average annual increase in value of between six and ten per cent, with ten per cent a maximum reached only by the most highly developed areas.

In the past year alone, however, beachfront property value has soared by up to 20 per cent.

Christodoulou also believes that the collapse of the Stock Exchange is a contributing factor.

"People are choosing to invest in property and land rather than speculating on the stock exchange, as they perceive it as a safer investment that still provides a good return," said Christodoulou. "Subsequently, demand has risen by around 40 per cent."

He said most of the demand is from Cypriots on the island, although an increase in foreign buyers has also been noted. Current regulations limit the level of investment by potential buyers from abroad; these include having to obtain permission from the municipality for purchase, and a restriction on ownership of one property per foreign family.

Loizou says that situation that will change once Cyprus joins the EU and these restrictions are lifted. He predicts that the volume of land and property sales will double on accession to Europe as foreign property developers enter the market.

"At present the property and land market stands at around £200m," said Loizou. "I expect that to rise to approximately £400m once the restrictions have been lifted and Cyprus completes its accession into Europe."

Currently, between 70 and 80 per cent of demand from foreign buyers in Cyprus is focused on the Paphos area, with around 20 per cent in Limassol and the rest of the market spread between the Pervolia area of Larnaca and Paralimni.

Of those buying property in Cyprus 70 per cent are British buyers, with the balance made up largely of people from the former Yugoslavia, Russia and Israel.

"The market for shops and offices is likely to see a downturn over the next year and possibly two, with residential properties in the cities maintaining steady growth," Loizou said. "However, the demand for beachfront property and the potential for investment by foreign property developers is still huge.

"At present Cyprus welcomes around three million visitors per year: with foreign investment and development of the market that figure could rise to four million."

Copyright Cyprus Mail 2002

[03] Losing out to Tax Reforms

AS THE dust settled yesterday after the 'battle' for the tax reform, the losers began to appear. Hit worst by the new package are wage-earners who do not pay income tax or belong to any social group that receives state benefits.

The tax-free ceiling has been increased to £9,000 but at the same time VAT went up by three per cent to 13 per cent with simultaneous hikes in fuel and other consumer taxes.

The government has also scrapped the three per cent defence levy though according to economist Costas Apostolides that would not make much of a difference to the class that was under the previous tax-free ceiling of £6, 000.

Apostolides told the Cyprus Mail that the main problem with the tax reform had been the people who would not benefit by the lifting of the tax- free ceiling and there had been thoughts to give them a cash payment calculated according to the VAT.

The idea was apparently abandoned.

"The biggest weakness (of the tax reform) is that it is regressive because this class has no benefits," Apostolides said.

There are members of this group who get state benefits depending on whether they have children, are pensioners or receive other public benefits. But what about low wage-earners who do not have children, are not pensioners and are not eligible for any other assistance?

According to the Head of the Cyprus College Socio-Economic and Political Research department, Charalambos Papageorgiou, wage-earners who receive a cost of living allowance (COLA) will have their VAT reimbursed after a few months.

Papageorgiou said that the consumer price index was expected to rise by around 1.2 per cent - around 0.4 per cent for every per cent rise in VAT - and would affect those without COLA coverage more.

Wage-earners would also benefit from the abolition of the defence levy and from then on "you have the increases in consumer taxes, which depends on the type of tax and if it is something you use", Papageorgiou said.

Papageorgiou said the overall tax package was not satisfactory, stressing that he had not yet studied the final version.

He said that it initially seemed to be beneficial for the rich - "the richer the better" - but "the government said this would be corrected by compensatory measures".

"But I don't think it's right to make a tax system which benefits the rich and then come and correct it.

"The system should have been okay in order to avoid corrections," Papageorgiou said.

On corporate tax, which was now the same for offshore and local companies, Apostolides said it would have a very positive effect on the economy in general because it would eventually allow offshore companies to become onshore.

"Ten per cent is quite attractive," he said.

But that was not the way companies viewed the matter especially regarding a provision obliging them to contribute two per cent on their employees' wages to the Social Cohesion Fund, which would be used to subsidise pensioners.

The Chamber of Commerce and Industry (KEVE) said the tax reform was unequal and could only hurt businesses and cut their competitiveness.

KEVE charged that its suggestions had been totally ignored and warned that it could appeal to the Supreme Court if the provision, as the chamber believes, proves to be unconstitutional.

"The new tax on companies will not allow them to compete in the new financial environment while at the same time, the negative treatment of businesses would have harmful effects on the development of the economy," KEVE said.

The tax reform failed to bring the necessary change to the country's tax system and instead increased overall taxation of businesses putting them in a worse position compared to their competitors.

KEVE argued that apart from the direct taxation on the operational costs, other related taxes, like the increase in VAT and fuel, tax on vans, etc, had to be taken under consideration as well.

According to Papageorgiou however, companies were better off than those abroad.

"The average corporate tax in the EU is around 30 per cent and Europe is planning to established a unified corporate tax of 30 per cent in the future," Papageorgiou said.

He added: "We had a decrease from 25 per cent to 10; it means we are better off compared to abroad."

Copyright Cyprus Mail 2002

[04] Big families angry about new seat belt laws

MEMBERS OF large families are complaining that the new law obliging motorists to install three seat belts in the back seat of cars left them out in the cold, as they can no longer travel without exposing themselves to legal violations.

Implementation of the law on safety belts commenced on July 1 and police began searching scores of cars to check for compliance.

Deputy Chief of Traffic Police, Andreas Paphitis, said yesterday police were initially handing out written warnings, giving people the opportunity to adapt to the changes, but cautioned that these warnings would become charges within the next few days.

European examples, Paphitis said, had repeatedly proven that rear seat safety belts mitigated the dangers of loss of life in road accidents and implored the Cypriot public to take heed of the fact.

Vice-Chairman of the Pancyprian Large Families Association (PLFA), Gabriel Gabrielides, charged the government yesterday with rushing to implement the law before devising an appropriate scheme for tax concessions on cars belonging to large families. By definition, a large family consists of four or more children. The result, said Gabrielides, was that families with more than three children could no longer take a trip to the beach unless they left one member behind.

The law currently provides one-off grant of £2,000 for large families to purchase a car. Alternatively, they may purchase a 12-seater minibus duty- free. Gabrielides explained this was not always the safest or most efficient option for large families with no more than four children.

The PLFA had asked the government for the option of large families to purchase 7-seater vehicles duty-free, thereby easing the pressure to remain within the limits of the law while securing insurance coverage for all passengers, which at present they can not do when commuting in a 5-seater vehicle.

In response to calls to exempt large families from the law on rear seat safety belts Communications Minister Averoff Neophytou said on Monday that it was up to parliament to make such amendments as his conscience would not allow him to do so. Neophytou stressed the question of seat belts in the back seat should not be used as a tool to contest entitlement to duty-free cars.

Gabrielides replied to Neophytou yesterday saying, "The PLFA never asked for a Mercedes. The government may indicate which 7-seater duty-free car would be available for large families if they like. As long as we have the opportunity to take our children with us when we travel."

From Monday, seat belts became compulsory for motor vehicles carrying up to eight passengers, excluding the driver. Vehicles carrying more than eight passengers and weighing up to 3.5 tonnes or goods carrying vehicles with mass weight up to 3.5 tonnes require safety belts in the front seats only. Penalties for not wearing or installing seat belts include up to three months imprisonment or a £500 fine.

Copyright Cyprus Mail 2002

[05] CY's second new Airbus arrives

He said the aircraft was delivered to Larnaca Airport on Monday night. The first A319 was delivered in April.

Angelis said that the new aircraft has 126 seats, is fully upgraded and will operate scheduled flights to Greece and Europe."We will also be leasing two new 295-seater Airbus A330s, which will carry out scheduled flights to London and other cities in Europe," he added. The two A330s are expected to arrive in December and January.Angelis also said CY's charter arm Eurocypria will be acquiring four Boeing 737s with 189 seats each, at the beginning of next year, on long-term contracts. The Airbuses currently leased by CY to Eurocypria will then be returned to the national carrier.CY has sold its four A310s to make way for the larger A330s, which will be used on long-haul routes.Angelis said that when all the new planes have been delivered, this will bring the fleet's total to 16 aircraft, which is expected to cover the company's needs for the next five years at least.

Copyright Cyprus Mail 2002

[06] Suspected embezzler arrested and released

Copyright Cyprus Mail 2002

[07] Cyprus and Iran see bright future in joint ties

CYPRUS and Iran agreed yesterday to look into establishing a joint committee to address various issues in the fields of energy, commerce, tourism and reciprocal investment.

Iranian Foreign Minister Kamal Kharazi met Commerce Minister Nicos Rolandis yesterday during a two-day official visit to the island. Kharazi said they reviewed various aspects of co-operation between the two countries in the fields of tourism, trade and business.

He said the prospects for co-operation were very promising. Rolandis said that the possibility of importing liquid gas from Iran, one of the forms of natural gas that Cyprus is considering in the future, was also discussed.

Kharazi also met House President Demetris Christofias to discuss the exchange of visits by parliamentary delegations for the benefit of both countries. He said visits by such delegations will improve understanding and co-operation between Iran and Cyprus.

Copyright Cyprus Mail 2002

[08] Clerides and Denktash wrap up fourth round of talks

The next meeting between Clerides and Denktash is due to take place on July 16.

De Soto leaves for Vienna today where he will brief UN chief Kofi Annan on the talks so far.

Next Tuesday he will be in New York to brief the Security Council, whose current president, British representative Sir Jeremy Greenstock, will make a statement after the briefing.

Copyright Cyprus Mail 2002

[09] New roadworthy laws

According to the announcement, the certificate would be necessary in order for the department to issue an official road-worthiness certificate that owners would be obliged to display on the vehicle's windscreen.

The decision is set to especially affect importers of used cars who would now have to MOT their vehicles at government-approved private garages at a cost of £25 each.

Copyright Cyprus Mail 2002

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