Factsheet for measure
CY-2022-11/2423
–
Updated
– measures in Cyprus
Tax cut on fuel
Μείωση φόρου κατανάλωσης καυσίμων
Background information
On 3 March 2022, the Cabinet decided to reduce fuel consumption tax to mitigate inflation and the effects of the war in Ukraine. The bill, which amends the basic tax law, was approved by the House of Representatives on 8 March 2022 under the procedure of emergency (Law 21(1)/2022).
Content of measure
The law provides for the temporary reduction of fuel tax from 8 March 2022 to 1 June 2022. More specifically, the law provides for:
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the reduction of the rate against classes 1,2,3,4 from €429 per 1,000 liters to €359 per 1,000 liters,
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the reduction of the rate against classes 6 and 10 from €400 per 1,000 liters to €330 per 1,000 liters and
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the reduction of the rate against the classes 7,9,11 from €74,73 per 1,000 liters to €21 per 1,000 liters
As explained by the Minister of Finance, this is a reduction of 7 cents a litre for diesel and petrol, amounting to 8.3 cents per litre if VAT is included, as well as a reduction of 6.4 cents per litre including VAT on heating oil.
Updates
The following updates to this measure have been made after it came into effect.
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21 February 2024
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On 21 February 2024, the Cabinet decided for the extension of the fuel tax reduction for another month covering the period up until 31 March 2024.
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19 October 2023
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On 19 October 2023 the Cabinet decided to restore the measure after the on on-going increases and the reactions of the society. The reduction of excise duty on motor fuel decreases by 8.8 cent per litre including VAT. From November 2023 to February 2024 the price of petrol is reduced from €0.429/litre to €0.359/litre and diesel from €0.40/litre to €0.33/litre. The financial cost is estimated at €21.8 million.
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22 February 2023
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The Cabinet renewed the extension of the measure several times since its introduction. The last decision of the Cabinet was performed on 22 February 2023 covering the period until 30 April 2023.
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27 June 2022
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On 27 May 2022 the Cabinet decided the extension of the measure covering the period until 31 August 2022.
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Use of measure
The measure does not target particular groups but the general population, which is assumed to be the final beneficiary.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Applies to all businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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National government
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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No involvement
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No involvement
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Form
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Not applicable
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Not applicable
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Social partners' role in the
implementation, monitoring and assessment phase:
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No involvement
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Main level of involvement: N/A
Involvement
The measure was decided by the government and approved by the House of Representatives after the pressure exercised by the sum of political parties, social partners and civil society with the on-going increases of fuel and other essential consumers’ goods. No structural dialogue has proceeded the decision but political parties and social parties submitted their suggestions to the government on how to confront the high prices. No social partner or political party is involved in the implementation and monitoring of the measure as the Ministry of Finance is in charge of the process.
Views and reactions
Despite the fact that the measure was welcomed by political parties and social partners, the government received many criticisms by opposition parties, in particular, for delays in taking measures and because of the need to expand the measure to mitigate the growing trend of prices in essential consumers’ goods.
Sources
