The government of Cyprus has decided to continue measures aimed at countering inflationary pressures, including an extension of a subsidy on electricity consumption and a reduced excise tax on fuel.
The Ministry of Finance said in a statement on Tuesday that the Cabinet of Ministers had approved the extension of the measure to subsidize the cost of electricity consumption for two additional months, from May to June 2023. The subsidy amounts to 100% for vulnerable residential consumers, while remaining tiered for other residential, commercial, and industrial low-voltage consumers. The subsidy also covers water users for water supply and/or irrigation and/or rainwater pumping on a bi-monthly basis.
The cost of the extension of the measure for the two additional tariffed months amounts to €21 million.
Meanwhile, the Council of Ministers has also approved an extension for a period of two months, from May to June 2023, of the reduced rates of excise duty charged on motor and heating fuels. The reduction is limited to 50% of the existing reduction, i.e. a reduction of 4.16 cents on motor fuels (petrol and diesel) and 3.19 cents on heating fuels. The government said that the reduction is being driven by developments in international fuel prices, which show a trend towards stabilization in 2023 at lower levels for petrol and a slight decrease for diesel and heating oil.
"The government, assessing the positive impact on the reduction of fuel prices, and thus on the reduction of costs borne by motor vehicle users as well as households/businesses using heating oil, has decided to further contribute to the alleviation of the economic costs borne by consumers and businesses in the Republic and is one of the measures being promoted to mitigate the impact of increased fuel prices," the statement said.
The total fiscal cost of the loss of excise and VAT revenues from the implementation of the two-month extension in question is estimated at €5.96 million.
The government will continuously evaluate the measures to take appropriate compensatory measures in line with developments.