Cyprus Mail: News Articles in English, 00-04-14

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From: The Cyprus Mail at <http://www.cyprus-mail.com/>

Friday, April 14, 2000

CONTENTS

[01] Klerides unveils tax package to offset VAT rise

[02] Market rumours send shares up

[03] Refinery workers call off strike after compromise deal

[04] Jet ski owners take protest to Nicosia

[05] Finnish tourists hurt in Limassol car bomb

[06] £20 million CTO budget approved

[01] Klerides unveils tax package to offset VAT rise

FINANCE Minister Takis Klerides yesterday unveiled the government's proposals aimed at offsetting the anticipated increase in Value Added Tax.

Klerides told a news conference the government would return around £47.2 million in tax breaks from the £62 million it expects to reap from a two per cent rise in VAT, from eight to 10 per cent.

"We expect that most of the changes will be in force about a month from today," Klerides said.

To counteract the increase in VAT, the government pledged it would increase tax-free income to £6,000 from the current £5,000 and modify the taxation scales on annual income.

Klerides said the minimum pension would be increased by 10 per cent, while inheritance tax would be abolished, costing the government an annual income of £4 million.

The minister also said the administration was scrapping the CyBC levy currently raised as a proportion of electricity bills.

The government persistently repeated it was imperative to increase its VAT revenue to come into line with EU norms of 15 per cent VAT.

But Akel General Secretary Demetris Christofias said earlier in the day that the government was acting too hastily in its EU harmonisation process.

He said his party disagreed with the way things were being done, accusing the government of hiding behind the EU to introduce policies that hit the people.

Christofias was speaking at a news conference called to present his party's suggestions for tax breaks to offset the rise in VAT.

Akel's proposals call for £60 million worth of tax breaks before the VAT increase is approved by the House.

Christofias warned his party would not consider any raise in VAT until the tax breaks were passed to lighten the burden of low income brackets.

"We are ready to discuss the proposal with other parties and do not see any reason why it would be rejected," Christofias said.

Among the measures proposed by Akel, was that tax-free income should be raised to £7,000 from £5,000, and that pensioners should get more tax cuts.

The last time VAT was raised was in 1994.

The Finance Minister said a deficit in the fiscal balance, estimated at about five per cent of GDP in 1999, would not be phased out by the changes, but would not be exacerbated either.

The government expects the balance to improve this year on the back of indirect taxes passed last autumn, greater efficiency on tax collection by the inland revenue, and streamlining its own spending, he said.

Friday, April 14, 2000

[02] Market rumours send shares up

SHARE prices climbed 1.84 per cent yesterday on the back of renewed interest in tourism shares, which surged on speculative buying in Droushia, giving the sector a 5.7 per cent boost.

The market was lifted from Wednesday's lethargy with traded value edging higher at £30.1 million on 7,705 deals, 1,000 more than Wednesday.

Tourism, other companiesand banking stocks absorbed the bulk of yesterday's trading volume.

Droushia, which comes under the tourism category, climbed 16 cents to £1.13 on 2.5 million shares changing hands, while Cassoulides were up 18 cents to £1.91 on a volume of 1.9 million.

"Nobody knows precisely what is going on there," a trader said.

Market sources said that, in both cases, investors were probably influenced by rumours -- which are unconfirmed -- that Droushia was poised to take over two hotel units in Cyprus and three in Greece.

There was also strong speculation on the market that Cassoulides was planning a joint venture with Phileleftheros newspaper.

In terms of gainers, Cyprus Airways came into rare prominence as a market leader when it jumped 21 per cent, or 38 cents, to £2.31 yesterday, hours after chairman Charis Loizides gave stockbrokers a briefing on the carrier's plans to issue rights shares.

The company plans to issue 50 million rights shares with a nominal value of 50 cents each to disperse government control to 66 per cent from the 81 per cent it holds today.

Rights will be offered to existing shareholders at a ratio of 1:1, though the company is also planning to introduce a share option scheme for its staff, offering the stock at a 15 per cent discount.

Traders said institutional investors were still active on the market, but dismissed speculation that the upsurge was drawing new players.

"We have seen very few new investors. A lot of institutional investors have been buying this week," one said.

Banking stocks were up 0.9 per cent. Bank of Cyprus rose 12 cents to £8.72, while smaller climbs were registered in Laiki, Hellenic and Universal, which rose two cents.

Meanwhile, stockbrokers decided yesterday that they would seek a meeting with bourse manager Nondas Metaxas today over heavy penalties the CSE has threatened to impose for paperwork errors in transactions.

Some stockbrokers said they thought the fines were illegal, leaving open the possibility of court action if the matter is not settled amicably.

Friday, April 14, 2000

[03] Refinery workers call off strike after compromise deal

THE one-day wildcat oil refinery strike is over. "It was cancelled" yesterday afternoon following assurances by Commerce Minister Nicos Rolandis to the refinery workers, SEK General Secretary Demetris Kittenis told the Cyprus Mail.

So there is no need to panic-fill car fuel tanks, Rolandis said after meeting yesterday with oil refinery board members and officers of the island's four oil companies.

Rolandis' assurances included oil company pledges to reduce their imports of higher-quality petrol and diesel fuel than the refinery is able to produce, until the government decides whether to upgrade or close the coastal refinery, north of Larnaca.

"This was a major problem with the (refinery) personnel," Rolandis said, "because if these products are imported, the public will prefer them, and as the refinery is unable to produce them, output would go down, and as a result there might be redundancies.

"In fact, these imports are already so popular that they are filling up the oil companies' storage tanks, leaving no room for the petrol and diesel the refinery produces, refinery union secretary Andreas Herodotou said yesterday.

But based on oil company pledges to reduce such imports, workers returned to their tasks yesterday, and PEO and SEK union leaderships planned to inform their members today - at a strike meeting they had already scheduled for 7am - of the contents of Rolandis' assurances, Kittenis said.

The one-day strike never shut down the Cyprus Petroleum Refinery Ltd completely, Akis Pegasiou, Financial Controller of British Petroleum (BP) said, and it never affected petrol or diesel production, he added.

So unless the workers had voted at today's 7am meeting to continue and step up their strike, Cyprus would not have faced a petrol or diesel shortage until the 10-day supply of fuel in refinery storage ran out, Herodotou said.

The workers did, however, stop producing asphalt for street paving, and the light fuel oil used to run factories, PEO General Secretary Bambis Kiritsis said "to get a message across" to the government that they wanted the refinery's fate decided soon.

And the refinery's laboratory workers ceased testing all aviation fuel - Cyprus imports all its aviation fuel - Pegasiou said, forcing fuel samples to be flown to Greece for testing before it could be used in jetliners or private planes, he said.

But since the tests take only one day by courier, and the oil companies "have stocks for aviation customers, I don't see any problem with this," Pegasiou added.

The strike was triggered by the Council of Ministers' creation on Wednesday of a ministerial committee to decide whether to close the refinery, or upgrade it to meet EU fuel standards, which require lower-sulphur diesel fuel than the refinery produces, and unleaded petrol, which it barely produces at all.

The workers view the uncertainty of the long-delayed government decision as a sword over their heads, and "they went on strike today to send a message" to that effect, Kiritsis said.

"If we proceed with the upgrading, probably these imports will be unnecessary," Rolandis said. "So I prefer that we stay where we are for the moment, just suspending imports and leaving things where they are for a while until the Council of Ministers decides what to do."

"Upgrading (the refinery will cost) around $40 million," so it would "have to stay there for a while so we can depreciate" the investment, Rolandis said.

But that would conflict with the state's years-old pledge to move the refinery out of Larnaca, whose growing tourist numbers view it as an unsightly, noxious neighbour.

EU accession confronts Rolandis with more oil problems than merely whether to upgrade, move or close the refinery.

EU rules require Cyprus to triple its 100,000-ton crude oil storage capacity to about 320, 000 tons. Building these tanks, on or off Cyprus, could cost over $300 million, he has said.

EU rules also require Cyprus to have a storage capacity for a minimum of three months - 90 days - of refined petroleum products, adding more millions to the cost.

Moving the refinery elsewhere in Cyprus - to keep the state's promise to Larnaca - could cost another $200- $400 million, Rolandis has said, raising the cost to "well in excess of $500 million" to comply with EU refining and storing rules.

If Cyprus takes another EU option and closes the refinery and moves all its storage tanks to another EU country – an acceptable option under EU rules - it will still have to pay the $300-million-plus cost of building the new tank farms. It would then be dependent on importing all its fuel for commercial and military purposes.

The oil problem is probably "the biggest single issue when it comes to our EU accession," Cyprus has to face, he has said, and the single most expensive.

Rolandis said the ministerial committee would not "take a long time" to reach its decision. "I believe that within a month we will have a decision that will go to the Council of Ministers" and that the fate of the refinery will be known "before the end of May."

Friday, April 14, 2000

[04] Jet ski owners take protest to Nicosia

DOZENS of jet ski owners and importers yesterday came in to Nicosia to protest against the Communications Ministry's refusal to endorse a House Committee plea to lift restrictions on the use of the pleasure craft.

Congregating outside the Ministry, the protestors said jet-skis should be in the same category as other high power craft, as they also operated outside designated bathing areas.

An announcement from the Jet Ski Importers Committee, which organised the protest, said jet skis made considerably less noise than other powerboats.

The protesters also said the lack of marinas on the island encouraged sea sports entrepreneurs to choose jet skis over other craft as their smaller size made them easier to transport and launch from the beach.

The Jet Ski Committee also said the average jet ski user was a working family man, whose afternoon break from work coincided with the 1pm to 4pm ban they are trying to get lifted.

Tourists were also being affected, the announcement said: "How would a Cypriot tourist like to go to Switzerland to ski and be told that the ski centre was closed between 1pm and 4pm?"

The Jet Ski Committee also said that ban would cause crowding on the beaches, with all users trying to cram their activity "into the few hours available."

The Jet Ski Committee also said that if the worse came to worse, jet ski owners would simply replace their craft with other powerboats - "so what problem would we have solved then?"

The jet ski operators said they were in favour of reasonable regulation of all craft, but not regulations "that limit only one type and abandon others to chaos."

They expressed the hope that "logic would prevail for the good of the public and our tourists."

The Plenum last June passed a law limiting the use of jet skis to the hours between 10am and 1pm and 4pm to 7pm. The House Communications Committee last week proposed that jet skis be allowed to operate without interruption, from 10am to 7pm.

Jet Ski Committee president Leonidas Sotiriou told the Cyprus Mail that yesterday’s protest had been an attempt to grab the attention of those who supported the ban.

"Unfortunately (the ones making the decisions) discuss the issue in their air-conditioned offices with their secure and steady salaries coming in every month."

Sotiriou, a jet ski importer who is involved in many aspects of jet ski operations, said 700,000 tourists used jet skis every year along with thousands of Cypriots, and that all these would be affected by the restrictions.

"We are constantly on tenterhooks, we have to hire staff and order equipment never knowing when new bans could arise," he said.

Sotiriou said the House Communications Committee had been convinced of the need for longer hours after speaking with people whose livelihood depended on jet skis and getting a clearer picture of the situation.

But any return to all day jet skiing was opposed yesterday were the Central Beach Committee and the Environmental Movement of Cyprus.

In separate announcements, both groups said this would cause noise pollution and increase the danger of swimmers being injured by jet skis.

Recent years have seen several serious accidents involving jet skis.

Friday, April 14, 2000

[05] Finnish tourists hurt in Limassol car bomb

The device had been set in the front part of a car belonging to lawyer Charalambos Loizou.

The car was parked under the Dhasoudi Court One apartment block on Panayiotis Tsangaris Street in Yermasoyia.

The 1.20am blast injured block residents Elli Wirlander, 70, and 58-year- old Raimo Palonen, who happened to be passing by at the moment of the explosion.

Palonen was lightly injured by shrapnel in the abdomen, while Wirlander complained of hearing problems.

They were both rushed to Limassol hospital and discharged after receiving treatment.

The car, a Mercedes, was badly damaged.

CID and bomb squad officers were soon on the scene, sweeping the area for clues, and police soon arrested three suspects in connection with the blast.

One man, aged 28, was remanded in custody for six days, but the other two were released.

Investigators believe the attack is linked to financial differences between the suspect and Marios Pazouras, a restaurateur that the lawyer represents.

Police told the remand hearing that the suspect had a power of attorney from a Russian woman who co-owned the restaurant, claiming £50,000 from Pazouras.

They said they had testimony that the suspect regularly visited the restaurant demanding the money and threatening Pazouras.

On another occasion, the suspect had allegedly intercepted Pazouras' car and beat him up causing grievous bodily harm, the court heard.

Friday, April 14, 2000

[06] £20 million CTO budget approved

The budget which covers the cost of running the semi-government organisation this year included the cost of hosting the Miss Universe contest which will be held in May in Nicosia.

Thirty-six deputies voted in favour of the budget and none against.

Four Social Democrat deputies abstained.

An amendment tabled by Takis Hadjidimitriou and Doros Theodorou of the Social Democratic Movement to scrap the ,4.5 million Miss Universe budget was defeated.

The CTO budget had been voted down in March by the left-wing Akel and centre right Diko parties.

It was the third year in a row that the two parties have opposed the budget, arguing the taxpayer should not have to subsidise the hotel industry.

© Copyright Cyprus Mail 2000

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