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20 May, 2024
 
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Cyprus ends fuel tax break, prices set to spike from April 1st

Consumers brace as government revokes fuel tax cut

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Starting April 1st, the reduced consumption tax on fuels (95-octane gasoline and diesel) will come to an end, reverting to 8.3 cents per liter for gasoline and 6.3 cents per liter for heating oil.

Konstantinos Karagiorgis, Director of the Consumer Protection Service at the Ministry of Energy, Trade, and Industry, stated to CNA that "the reintroduction of the consumption tax on fuels is expected at midnight on the last day of the current month." He added that this means the tax of 8.3 cents per liter will be reinstated on 95-octane gasoline and diesel, and 6.3 cents per liter on heating oil.

Karagiorgis noted that in the fuel sector, there has been a significant decrease in prices over the last quarter, which halted two weeks ago, followed by price stabilization. However, in recent days, there have been minor increases in fuel prices.

Additionally, Cyprus currently boasts the cheapest fuels in Europe, according to the European price observatory issued by the EU.

Regarding the removal of the VAT subsidy and the reinstatement of VAT on 11 specific product categories, Karagiorgis mentioned that VAT will be reinstated on 9 categories by April 30th and on the remaining 2 categories, concerning meat and vegetables, by May 31st.

Concerning the green tax reform bill, Karagiorgis mentioned that the public consultation on the bill has recently concluded, with expectations for its implementation within 2024. He added that, as announced by the Minister of Finance, the taxation will be accompanied by compensatory measures to be decided by the Ministry of Finance.

Savvas Procopiou, President of the Pan-Cyprian Association of Petroleum Dealers, stated that the termination of the reduced consumption tax on fuels comes at a challenging time, as they anticipate an additional burden on fuel retail prices due to the implementation of the green tax.

He emphasized that consumers and businesses will soon face an extra cost of about 14 cents, significantly impacting the existing price. Moreover, Procopiou highlighted that the situation becomes even more challenging when retail prices exceed €1.50 per liter, as consumers become more price-sensitive, affecting both psychology and affordability.

Procopiou also highlighted the logistical challenges of implementing price changes, advocating for price adjustments to occur on working days rather than holidays, aligning with the opening hours of fuel stations.

He noted the existing legislation requires price changes to occur at midnight the previous day, which needs reconsideration for practicality.

[With information sourced from CNA]

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Cyprus  |  tax  |  economy  |  gas

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