Tax cuts will not curb inflation in Cyprus — Cyprus Mail

In Cyprus, the government was to discuss possible steps in response to rising prices, but the editorial board of Cyprus Mail believes that tax cuts on fuel, electricity and basic goods cannot curb inflation. The publication noted that high prices had been the main public concern for the past eight months.

Parties’ positions

The AKEL and DISY parties are demanding that the authorities take action to combat the high cost of living. In particular, DISY called for permanent market oversight and a comprehensive plan of short- and medium-term assistance for people most affected by rising prices.

A Cyprus Mail editorial column states that Cypriot authorities have already reduced taxes on fuel and electricity, as well as VAT on essential goods, over the past year. According to the publication’s assessment, the inflation rate doubled over this period and reached 4.5%.

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Reasons for rising prices

Cyprus Mail links further price increases to global oil prices. In the editorial board’s view, oil supplies were affected by the war against Iran and drone attacks on oil refineries in the Russian Federation, an aggressor state.

The publication also points to rising costs of diesel and aviation fuel, which, in its view, will affect prices regardless of market controls. The editorial board argues that inflation is restrained by raising interest rates and limiting lending, which reduce consumption.

According to Cyprus Mail, tax breaks may support low-income households, but they will not stop inflation and may intensify price pressure. The publication wrote that the government was to consider the issue at a cabinet meeting next Wednesday after the president returns from New York.