Cyprus finance ministry monitoring fuel prices as costs keep rising
The finance ministry says it is watching fuel prices and will act if needed, after extending an 8.33-cent cut to fuel consumption tax until the end of November.
The finance ministry is “monitoring the situation” as fuel costs continue to climb in recent weeks amid developments in the conflict in the Middle East, ministry spokesman Michalis Papadopoulos said on Friday, as reported by Cyprus Mail.
“We are continuing to monitor the situation, and as and when it is judged to be necessary, we will take the requisite measures, as we have done in the past,” he told the Cyprus Mail. He pointed to the 8.33-cent reduction on fuel consumption tax, which was last week extended until the end of November.
One option that could be available to the government is a temporary cut to value-added tax on fuel. However, a European Commission spokesman has previously told the Cyprus Mail that such a move would not comply with EU law.
“While we fully understand the need to support citizens during these difficult times, it is important to note that the EU VAT directive does not provide for the possibility to apply a reduced rate on supplies of fuel,” the spokesman said.
German Economy Minister Katherina Reiche said on Wednesday that a temporary reduction of VAT on fuel would be “sensible” amid rising costs, speaking on the sidelines of a G20 energy ministers’ meeting in the United States. As recently as May, the German government had ruled out the idea, after Spain and Poland unilaterally reduced their own fuel VAT rates.
On Thursday night, Greek Prime Minister Kyriakos Mitsotakis stressed that “it is clear that the Greek reaction alone is not enough”, telling Greek public broadcaster ERT that Europe must do more in such a crisis.
In Cyprus, former Edek leader Marinos Sizopoulos had in April called on the government to unilaterally reduce fuel VAT, saying that while EU law prohibits it, petrol stations in the Republic of Cyprus face “unfair competition” from Turkish Cypriot authorities, to whom EU law does not apply. The Turkish Cypriot authorities have zeroed VAT on fuel since March 19, along with five other fuel-related taxes, and have also removed docking fees and customs duties on imported fuel.
What it means for residents
Fuel prices affect almost every household on the island, from the cost of driving to work to the price of delivered goods. The government’s existing tax cut runs only until the end of November, so any further relief depends on decisions still being weighed in Nicosia and Brussels.
- Watch the calendar. The current 8.33-cent reduction on fuel consumption tax expires at the end of November. If no extension or replacement is agreed, pump prices will rise by that amount.
- Budget for transport. Until any new measure is announced, assume fuel costs will stay high or increase. This also feeds into bus fares, deliveries and the price of goods moved by road.
- Follow official announcements. A VAT cut would require an EU-level decision, so any change will be announced by the finance ministry rather than applied automatically at the pump.
This text is written from the source article and is not a translation of it.
