Cyprus Mail: Press Review in English, 98-05-30

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From: The Cyprus Mail at <http://www.cynews.com/>

Saturday, May 30, 1998

Government suffers tax rebuff

THE HOUSE plenum's rejection of Finance Minister Christodoulos Christodoulou's tax package was the main story in every daily yesterday.

The papers were unanimous in declaring the 'no' vote a major defeat for the government, and for Christodoulou in particular.

An emergency bill providing for extra levies on cigarettes, fuel and imported second-hand vehicles was voted down by all except the governing party Disy, with junior partners Edek and the United Democrats jumping ship to side with opposition Akel and block the increases, the papers reported.

Phileleftheros said the rejection represented the first crisis in the government partnership established after President Clerides's re- election in February. Socialist Edek and the United Democrats saw the tax package as a reneging by the government on pre-election pledges not to increase taxes. They were also incensed at not having been consulted on the package before it was rushed to the House, the paper said.

The top-circulation daily also said fresh tax rises were unlikely at this stage, even though the government was desperate to cut the public deficit. Even so, the possibility of tax hikes was likely to cause confusion in the market, and the used-car market in particular. Panic-buying in the face of potential price increases was not unlikely, the paper concluded.

Alithia said the government's defeat in the House had put the brakes on all new taxation till October.

The pro-government paper also said the proposal to raise taxes had put Christodoulou in almost everyone's bad books, with the minister drawing fire from hoteliers, unions and political parties as well as almost all deputies in the House.

In a front-page editorial, the paper suggested tax rises were not the answer to the economy's problems. A wiser approach to reducing the public deficit would be to improve efficiency and cut red tape in the civil service, it said. Privatising government-controlled services was the way to go, it added.

Right-wing Machi went much further in its own editorial, calling on Christodoulou to consider his position in the light of the rejection.

The government left the House with its head hung low, the paper said. The tax package was a badly judged attempt to "dive into the pockets of the people." Thankfully, the House stood up to the government and blocked the bill, it said.

Right-wing Simerini joined in the editorial barrage against the government.

The state's efforts to curb the public deficit would be convincing if it began by putting a halt to "government squandering", the paper said. But the government had got it the wrong way round, seeking to get the populace to foot the bill for its own financial wastefulness, it said.

© Copyright Cyprus Mail 1998

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