Cyprus Mail: News Articles in English, 02-03-30

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

Saturday, March 30, 2002

CONTENTS

[01] Vassiliou urges politicians to hurry up and agree on tax

[02] Looking for fresh water in the sea

[03] Police hope increased use of DNA testing can improve crime-solving rate

[04] We're not there yet, says Clerides

[05] �4m profit for Cyprus Airways in 2001

[06] Central Bank to lose responsibility for offshore regulation

[07] Police probe wave of intimidation against Polemidhia farmers

[08] Parliament pledges �35 million water pollution clean-up

[09] Cyprus will line up with Europe on software piracy

[10] Farmers will get full subsidy until accession

[01] Vassiliou urges politicians to hurry up and agree on tax

THE GOVERNMENT'S chief EU negotiator George Vassiliou yesterday suggested the government should take DISY's tax reform proposal as well as the one tabled by opposition parties into serious consideration with a view of sealing an agreement on the matter as soon as possible.

In a joint news conference on Thursday, the emerging tri-partite opposition alliance of left-wing AKEL, social-democratic KISOS and centre DIKO put forward their proposals for a raised tax-free threshold of �10,000 per annum to compensate for the rise in VAT from 10 to 15 per cent.

Ruling DISY, which has proposed a �12,000 tax-free limit as part of its tax package, was quick to respond on the same day, saying that only five weeks ago, parliamentary committee discussion on the issue had been frozen because none of the three political parties could agree.

DISY deputy Prodromos Prodromou criticised the opposition parties for capitalising on the tax issue to boost their emerging presidential alliance. The government, which has tabled a �9,000 tax-free limit, up from the current �6,000, is being pressured by the EU harmonisation process to hike VAT and reform the island's taxation system as soon as possible.

"The Finance Ministry should seriously consider DISY's proposal as well as the one tabled by the three opposition parties and very soon position itself on them," Vassiliou told reporters at the House yesterday after a meeting of the European Affairs Committee.

"An agreement could then be reached in a spirit of understanding," he added.

Vassiliou reassured that certain provisions included in the three parties' proposal aiming at a fairer distribution of wealth were not in contradiction with EU demands.

"The EU does not care about our social policies as long as tax reforms benefit all residents equally, the Cypriots and the non-Cypriots," he explained. The EU insists Cyprus must revoke preferential tax rates for foreign companies.

The chief negotiator added that a possible increase of the tax-free limit from �6,000 to �10,000 or even �12,000 would also be in line with EU harmonisation.

"They don't mind about details of this kind. The Union only expects the Parliament to approve a tax reform proposal by June and there cannot be a delay," he stressed.

Vassiliou noted that the EU on Thursday had given the green light to Cyprus to close the tax harmonisation chapter on the basis of reforms his team had proposed to the Union.

Finance Minister Takis Klerides on Thursday reacted positively to the opposition parties' proposal, saying it was in many ways in line with the government bill.

The three-party proposal calls for a modernisation of the system, the stamping out of tax evasion and the redistribution of wealth.

The parties argue that their proposal will bring in an additional �420 million, offset against �210 million in tax breaks.

"Our bill is also aimed at modernisation and combating tax evasion," Klerides pointed out, nevertheless holding back from supporting the opposition proposal outright.

"We should very soon hold negotiations with DISY, AKEL, DIKO and KISOS in order to reach an agreement on tax reform. I believe the government proposal can help us reach this goal," he said.

Copyright Cyprus Mail 2002

[02] Looking for fresh water in the sea

A ministry official said that the French company had offered to explore for fresh water without any cost to the government.

After discussing the issue at the Cabinet on Thursday, the government decided to give the green light for the project after establishing there were no legal issues.

After the exploration has been carried out, the government will make a decision on whether to exploit any resources, if any are located. The official could not say when the French company would being work.

According to reports, the company, Nymphea, had expressed an interest in exploring off Cyprus since last year and approached the government then. "Now that the legal issues have been sorted, they can begin work," the official said.

Copyright Cyprus Mail 2002

[03] Police hope increased use of DNA testing can improve crime-solving rate

A MEETING this week among senior police officials decided to better the force's crime-solving rate with a string of measures, including an intensified prevention campaign and increased use of DNA testing.

The chiefs of the district CID departments said that serious crime incidents had dropped this year, but added that the crime-solving rate needed to be improved.

Of particular concern were cases involving arsons and bomb explosions, but recently-appointed CID chief Andreas Aristidou told the Cyprus Mail that the increased use of DNA testing would help solve these crimes.

The island's police force started using DNA testing back in 1998, availing of the Genetics Institute's facilities, which went operational that same year. The first major case cracked using new methods was that involving the 1997 murder of a French tourist by a local taxi driver.

At this week's meeting, Aristeidou urged all CID sections to work closer together with other police departments in crime solving.

Press reports suggested one of the high-profile cases being investigated using DNA techniques was that involving the disappearance of radiologist Giorgos Kinnis from Limassol. But Aristidou yesterday stressed that DNA testing was being applied universally and not limited to certain cases.

Copyright Cyprus Mail 2002

[04] We're not there yet, says Clerides

PRESIDENT Glafcos Clerides said yesterday that the necessary progress needed to make way for a solution to the Cyprus problem had not yet been achieved.

He was addressing a group of professors and students of the Philosophy Faculty of the University of Athens who visited him at the Presidential Palace.

Asked to comment on Turkish Foreign Minister Ismail Cem's statements as regards to Cyprus' EU accession that all relevant factors should be taken into account and that responsibilities should be attributed to the Greek Cypriot side, the President said it is not Cem "who will decide where responsibility lies in case of deadlock in the Cyprus talks, but the UN Secretary-general, based on the reports he will receive, and Europe, based on the reports it will receive from the EU representatives in Cyprus".

Clerides expressed his hope that the talks would have a positive outcome, which will prove beneficial both for the Greek and the Turkish Cypriot community in view of the island's EU accession.

The President made it clear that in a previous statement he had not said the Cyprus talks are at a deadlock, but that up to now there have not been such openings so that one might say there is substantial progress on the basic principles of the Cyprus question.

President Clerides and Turkish Cypriot leader Rauf Denktash have been having direct negotiation talks since January 16, under UN auspices. The second round of talks ended on Wednesday, with the third round expected to resume on April 9.

Copyright Cyprus Mail 2002

[05] �4m profit for Cyprus Airways in 2001

THE Cyprus Airways Group yesterday announced pre-tax profits of �4.0 million for 2001, compared to �5.6 million the previous year. After-tax profits clocked in at �2.3 million.

The group's revenue, excluding its duty-free shops operation, rose �16.3 million from �162 million in 2000 to �178.3 million last year, an increase of 10.1 per cent.

Operating costs went up from �165.5 million in 2000 to �182.4 million last year, an increase of 10.4 per cent, or �17.2 million.

Excluding extraordinary income of �901,000 from the sale of shares in France Telecom, and a �6.6m profit from Cyprus Airways Duty Free Shops Ltd, the group would have ended the year with pre-tax losses of �3.4 million. Sales of duty free goods came to �51.6 million in 2001, up from �46.2 million in 2000, an increase of �5.4 million or 11.7 per cent.

According to an announcement by the airline, the September 11 terrorist attack on the US had immediate negative effects on an already troubled international air transport industry, affecting passenger psychology and airline revenues, particularly in terms of increased insurance costs.

"Cyprus Airways is one of the few airlines in the world which rose to the occasion without state help," the announcement said. "Our increase in revenue is based on increased passenger numbers and an increase in flights."

The airline expanded its 12-strong fleet in 2001 by leasing two additional Airbus A320s, one of which went to its charter arm Eurocypria. The extra leasing and operational costs of the two new aircraft contributed to the group's increased expenditure in 2001, it said.

As part of its expansion strategy for 2002, Cyprus Airways will take delivery of two new Airbus A319s, one at the end of next month and one in June. The airline will also take delivery of two new Airbus A330s, one by the end of this year and the other in the beginning of 2003. One of its two large A310s will be sold.

The airline has bought the smaller A319s in order to increase the frequency of flights in the region and also has plans to branch out into Greece this year after pulling out of the bidding for Greece's ailing carrier Olympic Airways last August.

Copyright Cyprus Mail 2002

[06] Central Bank to lose responsibility for offshore regulation

LEGISLATION is being drafted which will remove the responsibility for offshore companies from the Central Bank, sources in the sector told the Cyprus Mail yesterday.

Both the Cyprus International Business Association (CIBA) and the Cyprus International Financial Services Association (CIFCA), which represent the offshore sector on the island, have held meetings recently with Finance Minister Takis Klerides to discuss the issue.

"The issues that are obviously pertinent to the offshore sector are tax and regulation," CIFCA sources said. "Who will our regulator be after accession to the EU?"

The sources said the offshore companies currently operated under exchange control permits but exchange controls will be abolished when Cyprus joins the EU. "If our permits have to change, it would seem logical that you won't have the Central Bank regulating one sector of the community and someone else the remainder of the financial services community. They are in the process of putting legislation together that would regulate the sector, and are in the process of appointing a regulator, and the Finance Minister has given the impression that the regulator would not be the Central Bank."

A CIBA spokesman said he had not heard anything specific, but that with the island's imminent accession to the EU, "it would be natural for the Central Bank's role to be effectively reassigned once there is no exchange control here and once there is no distinction between offshore and local companies.

"I understand there are regulations for the Central Bank to become a supervisory body, which is what the real role of every Central Bank in Europe is. They don't deal with company formations or taxation matter. It is inevitable that due to accession to the EU that this will happen here as well."

The Finance Minister could not be reached for comment and Central Bank Governor Afxentis Afxentiou said he was not aware of any such proposal.

Copyright Cyprus Mail 2002

[07] Police probe wave of intimidation against Polemidhia farmers

Local stock breeders have for months now been complaining they are being terrorised by unknown men who have on several occasions poisoned or stolen farm animals and caused damage to property.

Last Sunday, shots were fired at a farm shack, and the terrified owner later reported this to police. Limassol police chief has asked the local CID head to investigate, and has ordered 24-hour patrols in the area in a bid to catch the perpetrators.

Already, six suspects have been questioned, but no leads came up.

For their part, local livestock breeders believe that the terror tactics are being carried out by a "gang" of hired men acting on behalf of vested interests.

According to Nicos Kouloumas, president of the stockbreeders' association, livestock breeders are being pressured by certain quarters into moving their farms to another area, suggesting a link with the intimidation tactics.

Local stockbreeders have said they have no trouble relocating, provided the government finds them an alternative.

Copyright Cyprus Mail 2002

[08] Parliament pledges �35 million water pollution clean-up

THE HOUSE European Affairs Committee yesterday vowed to adopt a �35 million proposal to combat water pollution caused by 800 industrial units.

"The pollution of surface, underground and sea water will have serious financial and practical consequences," Committee chairman Tassos Papadopoulos of DIKO told reporters after a meeting on the matter yesterday.

Papadopoulos noted there were up to 800 industrial units causing water pollution by dumping their waste at unsuitable locations without a licence.

"This law will replace relevant existing legislation and cost a total of �35 million to the government, and the owners of the units that will have to implement anti-pollution measures," he said.

The bill will at the same time decrease the fine for unlicensed dumping of waste or failure to follow standard waste processing procedures from �20, 000 to �10,000. The new proposal also introduces a three-year prison sentence for certain offences.

Papadopoulos also spoke of a conflict of authorities between the Labour and the Agriculture ministries, both dealing with the problem of pollution.

"There is confusion about who is doing what," he said.

The Labour Ministry licenses industries to deposit their waste at selected locations, while the Agriculture Ministry is authorised to deprive units of their licences if they don't follow the right processing procedures.

During the Committee meeting, AKEL deputy Eleni Mavrou charged that the government was not making genuine efforts to protect the environment and bring Cyprus into line with EU demands.

"We only focus on not disturbing the little kingdoms," Mavrou said, referring to government departments.

Papadopoulos said the government had submitted a proposal to Parliament aiming to resolve the differences between the two ministries.

"The Committee concluded today though that the proposal does not solve the problem. Therefore, we shall approve the anti-pollution bill and see how we can find a compromise solution to satisfy both ministries," he said.

Copyright Cyprus Mail 2002

[09] Cyprus will line up with Europe on software piracy

CYPRUS has undertaken fully to harmonise its legislation on software piracy by January 1, 2003, the anti-piracy Business Software Alliance (BSA) said yesterday.

In a written announcement, BSA Cyprus said it had expressed its concerns over software piracy on the island to the Attorney-general's office, which admitted that there was problem.

According to BSA studies, the problem is Cyprus is serious. It estimates that three out of every four business software packages on the market are pirated, while software companies lose $20-$25 million each year due to illegal copying.

The BSA announcement said that, in replying to their questions, the Attorney-general's office had referred to "legal difficulties" in proving software piracy.

"There are some procedural difficulties in proving some preconditions prescribed by the law, which are necessary to prove that a crime has been committed, e.g. that the plaintiff is actually the creator of the software, that the programme is protected by copyright and that the specific software programs are illegal. Under the existing system, in order to prove the above, statements have to be taken from experts, who may have to come from abroad," the Attorney-general's office replied.

"All the aforementioned problems are expected to be dealt with more effectively with the amendment of the relevant law and possibly the law on evidence so as to make easier to prove the commission of the crime and render the process less complicated."

The production, sale and distribution of illegal software carries a penalty of two years in prison and or a fine of up to �1,500. Repeat offenders may be sentenced to three years imprisonment and or a fine of up to �2,000.

BSA in Cyprus, which represents the biggest software developers in the world, keeps the Attorney-general informed about international developments in the software piracy field. It also offers special training to police on how to identify illegal software and how to prepare successful court cases.

Copyright Cyprus Mail 2002

[10] Farmers will get full subsidy until accession

CYPRUS' EU chief negotiator George Vassiliou yesterday assured cattle breeders and crop growers they would continue to receive subsidies at least till the island acceded to the bloc.

EU law prohibits national subsidisation of agricultural products, and would like to see Cyprus gradually slashing these aids by the year 2003. But Vassiliou stressed that no changes to the current regime would be made, adding that Cyprus was negotiating the issue with the EU.

He went on to assure crop growers they would receive 100 per cent of subsidies for hay, cereals and wheat until accession.

Following accession, the government would make "intensive efforts" to ensure local subsidy rates were maintained; currently, the rates are higher than those in European countries.

One of farmers' concerns are that subsidy rates are relative to total production, which over the past six years fell dramatically due to an extended period of drought. Vassiliou said the Cyprus negotiating team would be sure to raise this issue, adding he was confident an understanding could be reached with the EU.

The island has already closed the majority of EU harmonisation chapters.

Copyright Cyprus Mail 2002

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