Cyprus’s Labour Ministry is seeking to head off criticism of proposed legislation that would wipe out about €58 million in debts, penalties and surcharges accumulated over nine years in connection with administrative fines for undeclared work, saying it is open to changes.
The bill has been before parliament since June and, although debate has not yet begun, some political parties have already raised concerns that certain groups could receive preferential treatment.
The proposal, which will be examined by the House Labour Committee after MPs return from their summer recess, would cap increases imposed on administrative fines for breaches of the law on undeclared work.
What the bill provides
Under the bill, increases resulting from delays by employers or self-employed people in paying an administrative fine could not exceed twice the amount of the original fine imposed by the Labour Ministry’s Inspection Service.
Under the current legal framework, unpaid amounts rise by €50 for every day of delay, resulting in accumulated debts of €65.6 million owed by employers and self-employed people.
The proposed change would apply retrospectively from June 2017, leading to the cancellation of part of those debts and surcharges.
Minister says government is open to changes
Labour Minister Marinos Mousiouttas told Phileleftheros in an interview that he was open to amendments.
“During the discussion in parliament, all aspects of the issue will be explained and we are open to further dialogue on any changes,” he said.
Mousiouttas said the current system adds €50 to a fine for every day payment is delayed, with no upper limit.
“In practice, this means that a €1,000 fine can reach €30,000,” he said.
The minister said this could leave very small businesses unable to pay the fine and the additional charges, with cases eventually ending up in court.
“The state collects nothing and the business is driven into a dead end,” he said.
Mousiouttas said the purpose of the bill was to impose a ceiling so that the additional charge could not exceed twice the original fine.
“The fine is not being written off. A limit is being placed on an increase that currently has none,” he said.
Social Insurance figures tell a different story
While the Labour Minister says the fines themselves would not be written off, figures from the Social Insurance Services accompanying the government proposal show that the overall amounts owed would fall sharply.
Debts arising from administrative fines for undeclared work currently total €65.6 million and concern 827 people.
If the bill is approved and the proposed ceiling applied, the amount owed would fall to €7.9 million.
The current debts, including amounts owed, interest and surcharges, of 722 employers total €56.7 million. Under the proposed formula, they would fall to €7.6 million.
The original administrative fines imposed on those employers totalled €2.4 million.
A further 105 self-employed people currently owe €8.8 million. If the bill is approved, they would be required to pay about €224,000, with €8.5 million written off.
The original administrative fines imposed on the self-employed group totalled about €74,000.
