Cypriot MEPs on Panama Papers, the Junker Plan and the cost of a Cyprus solution

The Panama Papers, the proposed new tax legislation in the EU, the Junker plan and the financial aspect of a Cyprus solution were the main issues Cypriot Members of the European Parliament discussed with a group of journalists representing local media, who are currently visiting Brussels.

The six Cypriot MEPs, Lefteris Christoforou (EPP), Takis Hadjigeorgiou and Neoklis Sylikiotis (GUE), Costas Mavrides (S and D), Demetris Papadakis (S and D) and Eleni Theocharous (ECR) referred to the Panama Papers as a scandal, pointing out the risk that Cyprus could be unfairly targeted.

Different views were expressed as regards the Junker plan with the majority of MEPs expressing the opinion that it has weaknesses that affect the ability of small countries to be eligible for funding. Cyprus is a good example of this as it has not been able to get any funding, they noted.

Eleni Theocharous, who initiated the discussion with the press, said that “Panama Papers is a big scandal”. She referred to the Ad hoc committee that is studying the issue, pointing out that tax evasion reaches 3 trillion Euros. Corruption and tax legislation are factors contributing to the phenomenon of tax evasion, as well as the lack of transparency, the refusal of the so-called tax havens to cooperate and provide information, she said.

She also said that banks in Cyprus northern Turkish occupied areas act as money laundering establishments.

Cyprus, Theoharous said, is also described as a tax haven “but I do not believe this is true”, and outlined the relevant laws and legislation that regulate these issues.

As to the Junker plan, Theocharous noted that SMEs did not receive the necessary help with their applications that would make eligible for funding.

Neoclis Sylikiotis described the Junker plan as “fireworks”, explaining that the plan Junker had proposed as a candidate for the post of EC President was different to the plan which was adopted after his election. He expressed the opinion that funds had been cut from other plans to sponsor the Junker plan.

“The plan’s structure is wrong as it requires private funds when the weakest financially countries, which are in greater need for funding, cannot tap this money”.

As to the Panama papers Sylikiotis said that the Ad hoc Committee will submit its report in 12 months after paying visits to countries mentioned in the Papers. Cyprus, he said, is not included in the list of countries the Committee will visit, however it is included in the papers and the state is called upon to take action.

Sylikiotis made it clear that his position is that tax legislation should remain the responsibility of the state.

Answering a question on the cost of a Cyprus solution, he noted that the island would advance financially after a solution is reached. The most important thing, he said, is to request EU funds for infrastructure, acknowledging at the same time that international sponsors are also needed, and expressing the belief they could be found.

Demetris Papadakis, in a general remark on the current situation in the EU, said that the Union faces serious problems as regards its economic policies, adding that this is the result of the fact that the policies are determined by the strongest member states. The EU, he said, should change direction because now the people are paying a huge price, citing the example of Greece “which should reform, but the formula applied is the wrong one”.

The Junker plan, Papadakis went on to say, has faults in its structure and philosophy because it favours financially stronger countries. Cyprus did not manage to take advantage of the Plan and the responsibility lays both with the lack of private initiative but also with the government that did not establish a platform to help the effort.

He described the Panama Papers as mainly an issue of transparency. The Cyprus government, he said, should have taken initiatives to take hold of all the relevant documents and make efforts to reinforce Cyprus image in order to protect the country from any related attacks.

As to the Cyprus issue and the possible cost of a solution, Papadakis said that “the more unfair a solution is, the more expensive it will be” and described the possibility of finding international sponsors “a myth”.

Costas Mavrides pointed out that not a single Euro went to Cyprus in the context of the Junker Plan, saying however that the plan’s philosophy i.e. the combination of public and private capital is correct.

As to corporate taxation, he explained that the aim of the legislation promoted in the EU would hit mainly small countries such as Cyprus whose competitive economic advantage is the taxation rate and the tax system. Cyprus, he said, can offer incentives to attract companies that transfer their headquarters and have a base in Cyprus.

As to the economics of a solution of the Cyprus problem, Mavrides said that the only possible source of funding is the natural gas reserves and that bonds could be issued, pointing out that at the end it all comes down to whether a solution will be fair.

Takis Hadjigeorgiou, a member of the Ad Hoc Committee set up to study the Panama Papers, said that what happened is that money has been taken from the pockets of people and it can be traced in countries listed in the Panama Papers.

Some 74 countries are named in the documents, he said, adding that many countries are described as tax havens.

He also said that out of all the countries mentioned in the documents, particular emphasis is placed on Cyprus with claims about money laundering, while the main players are banks of other member-states, for example German banks.

As to the possible cost of a Cyprus solution, Hadjigeorgiou said that “we do not have the full picture” and express the opinion that a solution should be considered in terms of the future and in terms of whether it can lead to a common homeland for all, Greek Cypriots and Turkish Cypriots.

Lefteris Christoforou, also a member of the Ad Hoc Committee on the Panama Papers, representing EPP said that they are being exploited in order to hit Cyprus.

Referring to the issue of taxation, he pointed out that Cyprus applies and respects European laws. It offers low tax rate as its economy is based on the services sector but everything is in the context of the law, he noted.

The EU should remain a free economy, he stressed. “A common taxation rate cannot be applied and this should be respected. We support healthy tax competition”, he said and added that in a globalised environment the EU stands to lose its competitive advantage if it persists with this. If it continues down this path, it will lose even European companies, he said, pointing out that this is a huge risk which should be taken into consideration.

Furthermore, Christoforou said that the Junker plan was approved at the European Parliament by a big majority and gave some numbers that highlight the Plan’s size and importance. In a year, he said, some 115 billion euros were given, adding that the Plan will be extended. He also pointed out that funds were given to SMEs, small projects and start ups. In Cyprus case, private initiative was not undertaken, he said. If the state cannot find a private investor, funds cannot be claimed, he explained.

Answering a question on the possible cost of a Cyprus solution, Chritoforou said that the cost paid over the past 42 years, since the Turkish invasion and occupation of the northern part of the island, is enormous whereas a solution will secure the future, stability and security in the country. A solution, he said, creates prospects.

Source: Cyprus News Agency