A total of 60 per cent of people will not pay tax according to the tax reform put forward by the government, Finance Minister Makis Keravnos said on Sunday.

This is a steep increase from the 45 per cent who do not currently pay tax.

“We are increasing the number of taxpayers who will not pay tax. Not paying tax at all is very important because I don’t know if there is another country where workers are fully exempt from tax,” Keravnos said in an interview with Phileleftheros.

Cyprus already has the highest tax-free rate in the European Union at €19,500, which is set to increase to €20,500.

Beyond that, to help vulnerable groups and the middle class, a further €1,000 for each child and each student will be offered for both parents.

Relief of €1,000 is given to both husband and wife who are paying a mortgage on their first home, and €1,500 if a loan is being paid to green the house.

“Weighing the above, the tax-free rate exceeds €30,000 for some people,” Keravnos said, defending himself against criticism that the reform will only benefit the rich.

He will meet party leaders on September 15 to outline the reform and has said he will scrap the whole programme if MPs try to change it in parliament.

He said he hopes this meeting will be positive and he is open to listening to constructive proposals.

He repeated that if the government’s goal of proceeding with tax reform for the first time in 20 years is not served by the House, “what common sense dictates is to withdraw it”.

Speaking about the budget for 2026, Keravnos said the government’s policy of “sound economic policy of surpluses and responsibility” continues, at the same time that development efforts are being strengthened and a broad social policy is maintained.

“Our economy through the 2026 budget will continue to be resilient and meet the expectations of the Cypriot people,” he said.

He also cautioned against a three-hour strike planned for Thursday by unions in the private and public sector over the full restoration of the Cost of Living allowance (CoLA).

“Such strikes create problems in the domestic gross product, where when the wealth produced decreases, the first to be affected are the workers,” he added.

Regarding the state payroll, he said that in the 2025 budget, the cost of general government civil servants was less than in 2024 and much less than in previous years, and the same level will continue for 2026.

This is possible through the diversification of service plans, the abolition of positions that no longer serve, transfers and secondments. He also said that studies are underway on the structure of the state salary and the frequency of granting the increases.