NICOSIA, Cyprus-Cypriot lawmakers on Friday approved a package of tax increases and cost cuts in a bid to forestall further credit rating downgrades and ease concerns that the European Union member country may be forced to seek a bailout. For the first time, government workers' pensions will be partially paid by a levy imposed on their salaries. Government workers will also take a pay cut of 1.5 to 3.5 per cent for two years according to how much they earn. Opposition parties, which hold a majority in the 56-seat parliament, voted to increase the levy to 3 per cent-half a percentage point more than powerful trade unions had conceded in negotiations with Finance Minister Kikis Kazamias.
Trade unions have threatened to strike if lawmakers breached that deal and hiked the levy. The package also includes tax increase for high income earners and property, and a €350 ($504) annual levy on all companies registered on the island. But lawmakers deferred a bill that would have raised the nation's sales tax from 15 to 17 per cent, which the finance ministry had hoped would earn €160 million ($230 million) over two years.