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Previous Previous Brake on profitability with ceiling at prices HOME • INSIDER • CYPRUS • Brake on profitability with ceiling at prices
& nbsp & nbsp Άγγελος Νικολάου & nbsp; & nbsp;
The government is trying to put another weapon in its quiver, so that it can deal with possible scams in the market, with yesterday's decision that allows it to set a maximum gross profit of traders. In this way it seeks to be an ally of households, to be precise, already on its knees, due to the rise of raw materials, energy and fuel. & Nbsp;
This decision, in contrast to the ceiling that already allows the Minister of Commerce to expand the list of basic products in which he can set a maximum selling price in both wholesale and retail, will have to be passed by Parliament first. The amendment to the bill was approved yesterday by the Council of Ministers and is not unrelated to the ongoing war in Ukraine since February 24, 2022. & nbsp;
Existing legislation allows the minister to issue a decree setting, for a period of up to 45 days, under certain conditions, maximum selling prices for a range of products which he can determine at any time by ministerial decree. To date, this list includes seven products, two of which were added after the Russian invasion. These products are bread, milk, water, electricity, Cypriot coffee, barley and corn. It is not excluded that the next extension of the list will include flour. & Nbsp;
According to the proposal submitted to the House by the Minister in charge, Natasa Peleidou, the continuing negative impact of the coronavirus COVID-19 on the world market, cause extraordinary and exceptional conditions of significant appreciation of consumer products due to the disruption of the world economy and supply chains of specific products or raw materials. As he explained, these extraordinary conditions make it necessary to introduce additional regulations to ensure the prevention of unfair profitability. & Nbsp;
The proposal expands the scope of the minister's powers by including the possibility of setting a maximum gross profit margin. This regulation seeks to prevent the unfair profitability of anyone involved in the wholesale and/or retail sale of the products, which are defined in the annex of the law, in periods of disturbances in the conditions of the world economy and the supply chains of specific products or. & nbsp;
This is essentially an emergency legislation. Gross profit margin is defined as the profitability ratio, which is expressed as the percentage of gross profit in a trader's sales during an accounting period.
the Minister “takes into account the conditions of the international and domestic market and in particular:
(a) The import prices of the products, in case they are not produced in the Republic, (b) the purchase cost of the raw materials for the production of the products to be produced in the Republic, (c) the production costs of the products in case they are produced in the Republic Democracy, (d) traders 'costs, (e) traders' profit margins, (f) consumer protection.
It is noted that in case the Minister of Commerce sets either a ceiling or a maximum gross profit margin for one or more of the products included in the law, all those involved must otherwise comply with heavy bells with fines that can reach up to € 200,000, depending on the nature, gravity and duration of the violation. & Nbsp;
TRADERS ARE CONCERNED, NO CONSULTATION
Anxious calm prevails in the ranks of traders after yesterday's decision of the Council of Ministers to intervene in their profit margins. Traders who have not been previously notified of the decision are awaiting official information on how the Commerce Department intends to implement the provisions of the law. It is noted that the proposed bill will be submitted to Parliament and will be discussed in the competent Committee for discussion and any elaboration, where appropriate, by the deputies. The organized groups will present their views in the Parliament, since the Government did not consult, as it considered that it is an emergency. & Nbsp;
Aim to avoid & nbsp; the suffering in Greece
The decision of the Minister of Commerce is not unrelated to the fact that, as the law is today, there is a great risk of imposing a maximum penalty, since there is a constant fluctuation of prices, especially due to the crisis. This proposal, approved by the Ministry, gives the possibility of imposing a ceiling based on gross profit, instead of the maximum price. In this way if the price of the raw material changes, the profit of the traders will not change from the moment the final price of the product changes. It is noted that in order for the whole project to succeed, a reasonable profit must be determined, which will be determined in consultation with the traders and this profit will be different depending on the conditions and data of each product.
This decision was taken after the & nbsp; inclusion in the list of products that can be set up as barley and corn and the decision of the Government to supply the same grain & nbsp; to cover emergencies, due to the difficulty of importing cereals – by traders – at current increased prices. In the event of a suspicion of notoriety, the Government has the tools to intervene. exceptional cases. & nbsp;
It is pointed out that a similar regulation was made by the Greek Government, however there were shortages in the market, which led the owners of retail products to impose a ceiling on the number of items that consumers can buy .
Regarding the Cypriot market, traders assure that there are sufficient stocks and there is no risk of shortage of any product. Therefore, there is no question of an artificial shortage in the market of basic goods, which were supplied by traders at a lower price and there are signs of an increase in the international price. & Nbsp;
