Nicosia, Cyprus. The government on Tuesday approved a two-month extension of the reduced fuel consumption tax on motor fuels, extending a measure in force since April that was due to expire at the end of the month. Government spokesman Konstantinos Letymbiotis said the extension from July 1 to August 31 is expected to cost around €12 million.
Extension of reduced fuel tax
Letymbiotis said the cabinet approved the continuation of the reduced rate of consumption tax on motor fuels for two more months. He said the decision was taken despite a downward trend in energy prices because prices remain above normal levels due to geopolitical developments.
The rate will remain at 8.33 cents per litre for petrol and six cents per litre for diesel.
Part of broader support measures
Letymbiotis said the reduced fuel tax rate was one of eight measures announced by the government at the end of March.
Other measures included a zero rate of VAT on meat, poultry and fish until the end of September, and the non-implementation of “green taxes” on fuel, which had been set to increase the retail price of fuel by nine cents per litre.
Parliamentary approval required
The extension must be approved by parliament before it can take effect. Only one plenary session is expected before the end of the month, scheduled for Thursday.
When the issue was previously debated by MPs, some called on the government to reduce VAT on fuel. A European Commission spokesman told the Cyprus Mail that such a move would be illegal.
Competition concerns
Marinos Sizopoulos, who was at the time an MP for Edek, said petrol stations in the Republic of Cyprus are subject to “unfair competition” from the north, where European Union law does not apply and where VAT on fuel has been zero since March 19.