Our View: President had no choice but to return VAT and foreclosure bills

Could there have been any doubt that the president would send back the bills by which VAT on fuel and electricity bills would have been scrapped until the end of the year? Had the parties, which drafted the bills and voted them through at the last session of the House before the summer recess, not known that these were unconstitutional and would have been sent back by the president?

President Anastasiades, having sought the opinion of the attorney-general, sent the two bills back to the House on Monday, explaining that they violated the principle of the separation of powers. The legislature was interfering in the authorities of the executive by imposing the VAT cuts that would affect the government’s fiscal plans. And it was in no position to assess the consequences on public finances.

Akel’s bill for zero VAT on special consumption tax on fuel would cost the state €30 million, while Diko’s bill stipulating zero VAT on the adjusted price of fuel in EAC bills, incorporating the greenhouse emission fines and cost of strategic reserves, would deprive the state of €45 million. It would be a significant loss in tax revenue for the state, which could cause it not to meet other financial obligations it has during the year. Once this happens it would the government that would be to blame and not the parties in the legislature.

If the parties knew the bills were unconstitutional and would be sent back by the president, why had they taken the trouble to prepare and approve them? Was this a cynical political ruse, to ‘expose’ the government’s unwillingness to lower the prices of electricity and car fuel that were making holes in the pockets of people, while showing the opposition parties’ sensitivity to people’s needs?

Judging by the third law that was sent back to the House by the president – the suspension of the foreclosures law for another three months – we could conclude that that pandering to the public is the only concern of the opposition parties. With regard to this bill, the president pointed out that the continuous suspension of this law would give the impression that it was permanently suspended both by borrowers and supervisory authorities. It could also lead to downgrades of banks and the state by ratings agencies as well as increasing the capital requirements of banks, the president explained.

All this is obvious to everyone but the deputies of the opposition parties, who also have difficulty in grasping one of the most basic principles of a democratic state – the separation of powers. We can only express the hope that the legislature will show a sense of responsibility and not choose the path of confrontation, which it is very likely to lose once the disputed bills are referred to the supreme court.