.
With the public sector deficit out of control and the trade unions rooted on their principle of not giving in to wage cuts, the Finance Minister scored an own-goal, knowing full well that the austerity measures would not get public support.
Perhaps Kikis Kazamias was told to drive matters to a dead-end in order to buy time with the hope that people would forget all about the crisis and move on with their lives. But there is nothing left to move on to.
The half-measures announced last week do little to help revive our faltering economy with the powerful civil servants’ Pasidy and the two private sector unions, Sek and Peo, stamping their authority on decision making issues and rejecting any freeze on government employee wages. They argue that they have already “given more than enough”, avoiding the key question of “but, how much?”.
What Akel has failed to realise is that it has a greater moral obligation to the 360,000 or so workforce on the island than only to the highly-paid civil servants, who by admission of their own union boss, number a mere 14,000. On the other hand, those in factories, farms, retailers and services who supposedly are the basis of Akel’s working class electorate, are faced with redundancies, forced pay cuts, suspension of benefits and so many more difficulties without the luxury of the public sector workers to just say “no”.
The longer these negotiations drag on, the harder it will be to cut the deficit. No austerity measures also means no growth and ultimately less tax revenue for the state in order to pay the civil servants. The 2.5 billion euro loan from Russia will only keep the civil service paid to the end of next year and perhaps into 2013, after which the idea could be to “let’s pass the problem on to the next administration.”
“Taxing the rich” as the popular party and the unions keep on chanting, will only close a small part of the huge gap. Tax evaders should be rightfully punished with harsh financial penalties, even possession of properties. But that is a drop in the ocean compared to what the civil servants should give up.
Taxing companies, whether local operations or international, does more harm to our reputation as a business centre (and higher future earnings) than the mishandling of the events leading up to and after the Mari blast last July.
Writing off back-taxes, as is being discussed in the House this week, should only be reviewed on a case-by-case basis.
The government has also been slow to boost the construction sector and infrastructure, while it has been dragging its feet on the issue of raising VAT, even for a short period, which had been suggested from last year.
It’s about time this government showed it has the courage to do whatever it takes to pass the long-overdue and watered-down austerity measures, no matter what the political cost.
Otherwise, it will simply be viewed as the weakling the opposition parties say it is.
