AUDITOR-GENERAL Odysseas Michaelides is to be congratulated for bring up the privileges guaranteed by the law to deputies in a letter he sent to the finance minister. There was nothing that had not been reported in the past in his letter, but it is important for an independent state official to take a stand on the issue and openly censure the shabby practices of self-serving deputies, whose primary concern seems to be maximising their earnings at the expense of the taxpayer.
In his letter, Michaelides highlighted the dubious provisions of the law ensuring deputies pay as little income tax as possible while allowing their non-taxable income to be used in the calculation of their retirement bonus and pensions. They have a gross monthly income of €6,611, of which only a little over a half is subject to taxation. They receive monthly allowances for job expenses of €1,945 and for secretarial services of €1,025 which are not taxed but are used in the calculation of their pension and retirement bonus (they also receive €683 every month as a travel allowance that is not pensionable).
As the Auditor-general pointed out, the secretarial services allowance adds €513 to their monthly pension and €29,000 to the bonus for a five-year term; the job expenses allowance gives them an extra €973 on their monthly pension and €55,000 on their bonus after two terms of service. This is a tax scam of the worst sort even if it is enshrined in law. What sort of law, in a democracy, in which there is supposedly equality before the law, could view part of the monthly income of a small group of people as an allowance for income tax purposes but as a salary for pension purposes? And in what country would an allowance paid, allegedly, for services be pensionable?
It is doubtful that these laws, drafted by our lawmakers for their personal benefit are constitutional. No other working person in Cyprus could claim close to €2,000 a month job expenses, without documenting all spending and not be taxed by the inland revenue department; nor could they pocket €1,000 a month claiming these were used for secretarial services without providing proof of payment. So why are deputies entitled to different treatment from every other citizen of the Republic by the tax authorities? Is there no conflict of interest in deputies drafting and approving laws governing their pay which include provisions allowing them to cheat the tax authorities?
The privileged treatment does not end there. Michaelides also pointed out that deputies were the only people for whom there were no pay cuts while they continued to receive a cost of living allowance and pay increases that were calculated in such a way (wrongly in his opinion) to maximise their earnings. In addition to this, they would carry on taking their pensions from the state (no monthly contribution required) instead of from the social insurance fund, despite the change in the law in 2013.
We know that taxing the full income of deputies, rationalising their pension entitlement and scrapping the bonus retirement would not make a big difference to state finance but it is a matter of principle. In a democracy, in theory, everyone is equal before the law and enjoys the same rights. A real democracy would not tolerate its lawmakers voting themselves privileges – such as making it legal for them to cheat the tax authorities – that set them apart from the rest of the population. Such blatant inequality is seen only in totalitarian regimes, in which rule of law does not exist.
This state of affairs has another negative effect. Political parties do not dare touch the many outrageous privileges enjoyed by public employees, at big cost to the taxpayer, because this could threaten the privileges of deputies. Some three years ago, when a the state was running out of money and some parties meekly suggested cutting pay in the public sector, the PASYDY boss responded by talking about the privileges enjoyed by hypocritical deputies and the parties immediately dropped the matter. There is solidarity among the island’s privileged.
Could things ever change so that Cyprus would cease being the land of privileges and special rights? Our self-serving and hypocritical deputies will certainly not voluntarily surrender their ‘legal’ right to give us little as possible to the state and collect the maximum from it. The Auditor-general does not have the power to change things, but by publicising the inequity he is keeping the issue alive.
In the end however, only strong public pressure – perhaps combined with appeals to the Supreme Court questioning the constitutionality of the deputies’ special treatment – could eventually end the rotten system of privileges that betrays the immaturity of our democracy.