By Yiannos Stavrinides
The Ministry of Finance, implementing the governance program of Nikos Christodoulides, has put six tax reform bills out for consultation with outside experts and stakeholders.
Such consultation is crucial when managing public resources, addressing health and safety issues, or safeguarding human rights. Broad participation ensures balanced decision-making. These consultations bring in groups directly affected, including subject-matter experts, interest group representatives, NGOs, local authorities, and minority representatives.
To make full use of the process, consultation should begin early, allowing time for revisions before final decisions are made.
In the case of tax reform, the framework was co-developed by the Economic Research Centre of the State University of Cyprus, which “listened” to the government’s priorities and drafted proposals accordingly.
Although consultation is meant to be inclusive, recent practice favors excluding individuals with conflicts of interest, those unrelated to the issue, and anyone unlikely to offer constructive input. For instance, in the United States, when environmental policies are discussed, proposals from non-residents or parties with conflicts of interest, such as real estate developers, are dismissed. Failing to filter out unsuitable participants can lead to complexity, unintended consequences, or even withdrawal of legislation.
In Canada, consultation on protecting internet users resulted in a law being withdrawn, after the process was exhausted behind closed doors in roundtable discussions that excluded the public. The withdrawal left the country unprotected.
Consultation often fails when treated as a formality: when time is short, when exclusion of participants undermines the process, or when the intent is merely to justify pre-decided policies.
The Christodoulides government’s tax reform rests on a clear philosophy. It was prepared by the University of Cyprus and opened for consultation on July 18, 2025. The government aims to implement it in 2026, which logically requires passage before the end of the year.
Yet the debate has opened Pandora’s box. Trade unions, employers, professional associations, and national bodies involved in the discussion have noted deviations from prior agreements. Trade unions worry that the proposed measures may exacerbate inequalities. Lawyers point to vague wording likely to create distortions. Employers question whether Cyprus will remain an attractive destination for investment, while insurers argue that savings are being undermined.
The government now faces a potential failure, having applied all the poor practices at the preparation stage. With the consultation period ending on September 10, the current trajectory may result in delayed implementation, adoption of a different version than intended, or even total withdrawal. The responsible minister has already stated that, between a bad reform and nothing, he will choose nothing.
Every reform that fails to materialize is a lost opportunity for the country. Yet reforms that end up producing the results typical of local government would be better left unimplemented.
