Cyprus Mail

Averof Neophytou: A focus on income tax reform

interview averof neophytou’s income tax reform focuses on taxing families not individuals as is the case at present
Averof Neophytou’s income tax reform focuses on taxing families not individuals as is the case at present

The Cyprus Mail has sent questions to the main candidates in next week’s presidential elections. Below is Disy candidate Averof Neophytou’s response

Which do you think are three main issues at stake in this presidential election?

The Cyprus problem, the economy and migration are the three main issues of concern today. A key prerequisite for finding meaningful solutions to each of them is to have competent, stable, decisive and credible governance. Otherwise, we will stall and find ourselves facing deadlock.

Our priority is to solve our national issue. Even now, when we are confronted with a revisionist, aggressive Turkey, we must through constructive initiatives remove the current obstacles. We must find our way back to the negotiating table.

The migration issue is also linked to the Cyprus problem. Almost 100 per cent of illegal migrants come from Turkey, 95 per cent via the Green Line and the rest by sea. A Cyprus settlement will also have a positive effect in addressing this issue.

As regards the economy, to have a strong economy, you need to have credibility, security and stability. Any development that creates uncertainty, any experimentation or backtracking will be disastrous.

Do you have specific plans for helping people deal with the rising cost of living?

A president must support society and the family in the coming crisis and have the welfare state we want, with a well-functioning Gesy and good schools, with a minimum guaranteed income, a national minimum wage and decent pensions, with crèches for working mothers, with affordable housing and affordable rent for our young people must keep the economy strong.

Without a strong economy, all promises are just words. Today, our economy is strong. But it is not a given. There is no room for error. The state must have fiscal space to be able to provide support where it is needed. If we can maintain a stable economic environment, then we can meet the challenges. With a slip, Cyprus will lose the investment grade it enjoys and go back to the junk category.

Our strategy is to create the right conditions to leave more disposable income in the pockets of the public. This is the role of the pioneering reform we are proposing on family income tax.

Without risking fiscal stability, we would introduce a measure that places us in the first category of socially vulnerable countries in the world. We are combating inequalities and strengthening the family’s income.

Based on family income, if a couple wishes, they can file a family tax return, so as to enjoy tax benefits as a couple that would also benefit their dependents. They will enjoy very significant tax relief that they don’t have as individuals.

With the Family Income Tax Credit, we estimate that 126,000 families out of half a million will benefit directly.

And for our fellow citizens whose household income is below the poverty line, the state will make up the difference with an allowance. Through this social reform, more than 50,000 households and almost 120,000 of our fellow citizens will benefit.

The standing of Cyprus abroad has been tarnished by the golden passports, which has also landed us in trouble with the Brussels. We have also been at the centre of European parliament investigations regarding illegal surveillance software. How do you plan to improve our country’s image abroad?

For us there is one position. Everything in the open at all times. However, we must acknowledge that in the last decade many cases of corruption were brought to court. Our goal is total transparency. Already, a strong anti-corruption system has been set up and fully meets the requirements of international organisations such as Greco. Cyprus is currently judged as very trustworthy by leading European and international institutions, both on sanctions against Russia and on combating money laundering, as noted in the latest Moneyval report. We are moving forward with specific legislation and strategies, the anti-corruption authority, the witness protection framework, on conflict of interest and lobbying. Furthermore, anyone running for state office would have to sign an authorisation check on all funds concerning him and his family not only in Cyprus but worldwide.

Can you give us three practical measures you would take to deal with the migration problem?

First, stricter surveillance of entry channels. Physical and electronic fencing where necessary, but also fair treatment of those affected and full compliance with the law. Secondly, bilateral repatriation agreements, and we should stop expecting everything from Europe. And thirdly, effective integration and inclusion in society for genuine refugees and beneficiaries of political asylum.

Migration is among the top challenges facing our country today. We have exceeded our capacity, in terms of the number of asylum seekers we can handle. This is an issue that needs serious analysis. The EU’s assistance is required, with an emphasis on Turkey’s compliance with its contractual obligations, which – as far as Cyprus is concerned – are being flagrantly violated. We must continue to demand the implementation of the EU-Turkey agreement in the case of Cyprus as well. When we achieve this, we will have taken a huge step towards resolving the problem.

We must act immediately on three levels: First, informal migrants must immediately return to their countries of origin or be relocated through a European solidarity programme to other EU countries. Second, we must take drastic and effective measures to restrict incoming flows. Third, we need to speed up the procedure of examining applications, so that illegal migrants are rejected, and, for the few who are entitled to international protection, a programme for their integration is immediately activated.

Is there an innovative project your presidency would undertake?

I believe that we have already tabled one of the most radical tax reforms since the establishment of the Republic to support the family: the family income. With this proposal, the taxation of workers’ income is transferred from the personal level to the basis of the “family income”. It’s a fairer system that aims to reduce inequalities and support the family according to its make-up. In this way, we are actively strengthening the institution of the family by supporting large families, single parents, people with disabilities. Every family can improve its standard of living.

Gesy has been under pressure, plagued by overspending, staff strikes, complaints by patients. Can things be improved?

Gesy is our greatest social conquest and I want to make this clear: there is no question of changing the philosophy and the architecture of Gesy. However, it is normal for there to be weaknesses and problems in such a big social reform.

We must correct these problems and work to eliminate the weaknesses. To fix, not tear down, through a political and social dialogue, to ensure that Gesy is healthy, of high quality, sustainable and viable for the next generation.

Housing is becoming unaffordable in parts of the country. What can be done to help?

I completely understand young people who want to start their own household, but have a hard time doing this. A lot has been done by the government but we will not stop there. Conditions are difficult, there is a crisis, there is a rise in interest rates, but it is the duty of the politician to find solutions. We have worked out a special chapter in our programme on affordable housing and affordable rent to give our young people prospects for starting their own home. Our goal is to strengthen and expand all relevant programmes and subsidies that would facilitate access to housing.

The production of social and affordable housing will be accelerated and made more efficient through partnerships with the private sector.

With the allocation of state land and/or an additional building coefficient, we will be able to provide house ownership to displaced people without title deeds, the socially disadvantaged and eligible young couples quickly and without additional financial burden on the public purse. Another advantage of this policy will be that increased supply will keep house prices and rents in check.

There is great inequality between workers of the private and public sector – in terms of pay, pensions, job security, work conditions – which undermines social cohesion that you value. Do you believe this unfairness should be addressed?

My position on this issue is known and unchanged. The average wage in the private sector must at least reach the same level as the average wage in the public and semi-governmental sector. If we reach this point, we will also become a normal state labour relations and the economy. This does not mean that wages in the public sector should be reduced, but that businesses, which produce wealth, through the increase of production and the right incentives from the state, would be able to reward their workers. At the same time, if the link between pay and productivity increases is achieved, social justice will be achieved.

Will you follow the practice of seeking the archbishop’s approval for the person who will be appointed education minister?

It is the president of the Republic who appoints the education minister, as well as any other minister, as part of his/her constitutional powers. Every institution in our democracy has the right to express its opinion on issues that concern it.

Would your government be prepared to introduce same-sex marriage and allow the adoption of a child by same-sex couple as is the practice in most European countries?

Our society has made great strides forward. Every social reform that has been made in this country has carried out by Disy.

Personally, I am a liberal and I believe that all people should have the same rights and obligations. It is time to introduce same-sex marriage. On the issue of adoptions, I am opposed. Every decision should be determined by how the interests of the child are best served.

We have a principle. To always operate on the basis of human rights, while seeking broader consensus that makes any necessary changes in legislation acceptable.

Would you support the legalisation of marijuana?

I believe we are not there yet.

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