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Cyprus Mail: Press Review in English, 99-12-23

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From: The Cyprus Mail at <>

Thursday, December 23, 1999

Market tax compromise reached

THE WHEELER-DEALING surrounding the government's efforts to find an acceptable rate of taxation for profits from the selling of shares attracted the attention of most newspapers.

Alithia reported that the government and Disy had agreed on a joint proposal of four points that included the following: reduction of income tax on profits for 1999 from 40 to five per cent; the right of institutional investors to be exempt from taxation; introduction of a one per cent levy on all stock exchange transactions from the new year and the scrapping of income tax; commitment from the government not to impose any new taxation for two years. The proposal reduced income tax and encouraged firms to seek a Stock Exchange listing, said Disy leader Nicos Anastassiades. The agreement was reached at a meeting of the finance minister and the Disy political bureau. The minister said the bill would be submitted to the House for approval on Tuesday.

Politis did not take the Disy-government deal at face value. Under the headline Devious scenarios for Stock Exchange tax, it spoke of plan that would lead to the imposition of a one per cent tax on profits instead of the agreed five per cent. According to the paper's theory, at Tuesday's House session, Diko would propose a one per cent income tax rate for profits and it would be supported by Disy. It quoted an unnamed Diko deputy as saying that his party would propose the lowest possible rate of income tax, one per cent, and Disy would back it. This was why Anastassiades, while committing Disy to the five per cent rate, did not rule out the possibility that Disy could vote for a proposal by another party.

Simerini reported that the Cyprus Stock Exchange was taking a powerful beating as the relentless profit- taking did not allow prices to bounce back. The ongoing problems faced by the Stock Exchange as well as the issue of the taxation of profits had adversely affected the mood on the floor. From the last day of the previous week, the share index had fallen by 7.19 per cent. In another article, the paper said that all investors who had decided to cash in their profits before the end of the year, had blundered as they would pay at least five per cent income tax, if the government bill is passed. Those who sell their shares next year would not be subject to income tax.

Haravghi said that the workers, who were to carry out a two-hour work stoppage yesterday, would be sending a very powerful message in all directions They would be showing that they were not prepared for a further decrease in the their standard of living and would not accept a decision that would destroy the institution of the Cost of Living Allowance (CoLA). The communist party-controlled union Peo called the work stoppage in protest against the government's decision not to include increases in consumer taxes in the calculation of CoLA. Peo's boss warned that if the government stuck to its position it would be faced with the reaction of the overwhelming majority of the workers.

Phileleleftheros, leading as always with the Cyprus problem, said that in the second round of proximity talks, the two sides would discuss the distribution of powers and security. After the first round of talks, UN mediator Alvaro de Soto said there was a certain degree of convergence on these two issues. The UN would therefore focus on these in the second round. With regard to the distribution of power, the UN as well as Britain and the US, supported the creation of a loose federation, which would have a central government with limited powers. Both sides expressed their views on the matter and all mediation efforts would now focus on the issue of sovereignty.

Machi reported that some 350 prisoners, who were serving time for minor offences, would be released by presidential pardon today. The main reason for the large number of pardons was the over-crowding of the Nicosia Central Prison, the paper said.

© Copyright Cyprus Mail 1999

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