Bill to cut special defence contribution redundant say opposition parties

Opposition parties on Thursday said they have already drafted a bill cutting the special defence contribution from 30 to 17 per cent, pointing out that there was no need for the government to submit similar legislation.

Disy said that it and MPs from other parties had tabled such a proposal three months ago. And they hinted that the government was now trying to take credit for the idea.

Speaking to reporters, Disy MP Savia Orfanidou said they wanted their own bill voted on as soon as possible.

“We feel that this tax, which went up gradually from 10 per cent to 30 per cent as a measure implemented under the [Cyprus bailout] memorandum, should now be reduced to 17 per cent, the same as the tax on dividend.

“It is noted that for some years the state earned no revenue from this tax due to zero interest on deposits.”

Bank deposits’ interest is subject to a 30 per cent yield tax called special contribution for defence.

The special contribution for defence is imposed on dividend income, ‘passive’ interest income and rental income earned by companies tax resident in Cyprus and by individuals who are both Cyprus tax resident and Cyprus domiciled.

“Our proposal has nothing to do with the high cost of living, for which we believe the government must bring back the [relief] measures for fuel and electricity,’ added Orfanidou.

“Nor does it have to do with the wide margin between lending rates and deposit rates, about which we have said many times that the banks must help alleviate the fallout on borrowers and depositors. It is that, quite simply, the 30 per cent is a very high tax, and we think it’s time that it be brought into line with the tax on dividends.”

Edek MP Elias Myrianthous, one of the co-sponsors of the legislative proposal to slash the special defence contribution to 17 per cent, said that their bill should take priority as it’s already there.

He said that taking the bill to the plenum could happen as early as next week.

By contrast, waiting for the government to table its own bill from scratch would take time – perhaps months.

Likewise, Greens MP Stavros Papadouris harangued the government for “copy-catting legislative proposals drafted by the parties.”