Starting from 1st April, the reduced fuel consumption tax, which was lowered by 8.3 cents per litre for petrol (95 octane) and diesel, as well as by 6.3 cents for heating oil, will be terminated.
Konstantinos Karagiorgis, the Director of Consumer Protection Service at the Ministry of Energy, Commerce and Industry, stated that the consumption tax on fuel is expected to be reintroduced at midnight on the last day of the current month.
He added that this means the tax of 8.3 cents per litre for petrol (95 octane) and diesel will be reinstated, along with the 6.3 cents per litre tax on heating oil.
According to Karagiorgis, the first data in the fuel sector indicates that “there has been a significant reduction in fuel prices in the last quarter, which stopped two weeks ago,” followed by a stabilization of prices, while “in recent days, we see very small increases in the fuel sector.”
The second piece of data, he continued, is that “today Cyprus, based on the European price observatory issued by the EU, has the cheapest fuel in Europe.”
Regarding the abolition of the VAT subsidy and the reintroduction of VAT on 11 specific product categories, Mr Karagiorgis said that VAT will be reinstated for 9 categories on 30th April and for the remaining two categories related to meat and vegetables, VAT will be reinstated on 31st May.
Regarding the draft law on green tax reform, the Director of the Consumer Protection Service told CNA that the public consultation on the draft law has recently been completed and “the specific taxation is expected to be introduced within 2024.”
He added that, as announced by the Minister of Finance, this taxation will be accompanied by compensatory measures to be decided by the Ministry of Finance.
According to the procedure followed, after completing the consultation on the draft law, it will be submitted to the Council of Ministers for approval and then to the Parliament for discussion and voting.
Furthermore, in statements to CNA, the President of the Pancyprian Association of Petroleum Dealers, Savvas Procopiou, said that the termination of the reduced consumption tax on fuel “comes at a very difficult time because at the same time we expect an increase in the retail price of fuel due to the imposition of green taxation.”
“So consumers, as well as our businesses, will soon, within ten days, bear an extra cost of about 14 cents, which is significant on the existing price,” he noted, adding that the overall increase will be around 10%.
Additionally, Procopiou said that the cost for dealers is doubled because, as he explained, besides being consumers, “we are forced to take 2,000 euros out of our pockets – approximately 1,000 euros for our stocks and about 1,000 euros for our monthly customers – for every one-cent increase in fuel prices.”
Moreover, the President of the Association said that the situation with prices becomes even more difficult when the retail price exceeds 1.50 euros per litre, as consumers from this point onwards pay more attention, making this price a “matter of psychology and pocket.”
He mentioned that the price of diesel with the termination of the reduced VAT rate will exceed 1.50 euros per litre.
Regarding the issue of price adjustments, Mr Procopiou told CNA that the association has sent a letter to the Director-General of the Ministry of Finance requesting that “price adjustments should be made on a working day and not on a holiday, and on the 6th morning of the first working day after their decision,” and this is because, as he said, “it is practically impossible for someone to go to his gas station at midnight to change prices.”
“We need to apply the 6th morning, the time we open our stations,” he added.
He added that the existing legislation states that the change in fuel prices must be made at midnight of the previous day, but this needs to change at some point.
