House rejects president’s electricity, fuel referrals (updated)

The House of Representatives, in a hastily called session of the plenum on Tuesday, rejected the referral of three bills by President Nicos Anastasiades.

Two of the bills – scrapping double taxation on fuel and ending the charging of VAT on emission costs in electricity bills – were sent bank on the advice of the attorney-general who was of the view that they were unconstitutional because they violated the separation of powers.

The third, which aimed to suspend the foreclosures law for three months, until the end of October, was referred on the grounds that it would put at risk the credit ratings of the state and banks as well as jeopardise the release of funds by the EU.

The 12 deputies of Disy that were present voted in favour of accepting the referrals while 27 voted against.

The president now has the option to accept the House’s decision or refer the bills to the supreme court which will decide on their constitutionality. Pending a supreme court decision, the laws will not be implemented.

During a meeting of the House finance committee, held before the plenum, the permanent secretary of the ministry of finance, Giorgos Panteli, warned that the two bills reducing VAT on fuel and electricity could land the Republic in trouble with the European Commission.

The release of the first tranche money from the EU’s Recovery and Resilience Scheme could also be put at risk by the bill suspending the foreclosures law, said Panteli. The €85 million which should have been released in February was withheld until a bill, creating a framework for the supervision of debt management companies was approved. This was approved in July, after months of discussions by deputies.

Panteli told deputies on the committee that the two bills, backed by all the opposition parties and aimed at reducing the price of fuel and electricity for consumers, “contravened the EU acquis and will lead the Republic to new adventures.” He cited the Commission’s letter of July 27, which described the two bills as “problematic” and asked that the situation was put right based on the EU acquis.

The total cost of the two bills for the government would be in the region of €105m, said Panteli, saying that this would be added to the €350m the government had spent on measures to help consumers deal with higher prices.

“If the laws are put into force the total support would reach almost half a billion euro; this is an amount that cannot be handled by the finance ministry,” said Panteli, rejecting claims by deputies that state revenue had increased by €300m, as a result of the higher prices of electricity and fuel.

This was nowhere near the true figures. In the first half of 2022, state revenue from fuel increased €1.7m compared to the same period 2021, while state revenue from the consumer tax and VAT on electricity was up €3.4m in the first six months of 2022.

As regards the suspension of the foreclosures law, Panteli said this would “not allow the implementation of the legal framework voted by the legislature with regard to tightening the supervision framework for debt management companies.” This was the 14^th landmark that had to be met for €85m to be released by the Recovery and Resilience Scheme.

If the suspension went through it would prevent the implementation of the approved framework. This would be taken into account by the European Commission when assessing whether the Republic had achieved the 14^th landmark, Panteli said and added:

“During the assessment, the Commission could deem that the suspension affects the effectiveness of the framework and the implementation Recovery and Resilience Scheme, meaning the funding of the Scheme.”