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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure CY-2022-11/2423 Updated – measures in Cyprus

Tax cut on fuel

Μείωση φόρου κατανάλωσης καυσίμων

Country Cyprus , applies nationwide
Time period Temporary, 08 March 2022 – 31 August 2022
Context War in Ukraine
Type Legislations or other statutory regulations
Category Responses to inflation
– Support for fuel expenses
Author Loucas Antoniou (INEK) and Eurofound
Measure added 30 May 2022 (updated 12 September 2022)

Background information

On 3 March 2022, the Cabinet decided a reduction in fuel consumption tax within the context of policies of the government to mitigate the 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:

  • reduction of the rate against classes 1,2,3,4 from €429 per 1,000 liters to €359 per 1,000 liters,
  • reduction of the rate against classes 6 and 10 from €400 per 1,000 liters to €330 per 1,000 liters and
  • 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.

27 June 2022

On 27, May 2022 the Cabinet decided the extension of the measure covering the period until 31 August 2022.

Use of measure

The measure does not target particular groups but the general population, which is assumed to be the final beneficiary.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Applies to all citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • 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 been proceeded the decision but political parties and social parties have submitted their suggestions to the government for the confrontation of expensiveness. 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 the opposition parties, in particular, for delays in taking measures but for the need for the expansion of the measures to mitigate the growing trend of prices in essential consumers’ goods.

Sources

  • 08 March 2022: ΝΟΜΟΣ ΠΟΥ ΤΡΟΠΟΠΟΙΕΙ ΤΟΥΣ ΠΕΡΙ ΦΟΡΩΝ ΚΑΤΑΝΑΛΩΣΗΣ ΝΟΜΟΥΣ ΤΟΥ 2004 ΕΩΣ 2021 (www.cylaw.org)
  • 27 May 2022: Support package to repond to inflation (www.presidency.gov.cy)

Citation

Eurofound (2022), Tax cut on fuel , measure CY-2022-11/2423 (measures in Cyprus), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/CY-2022-11_2423.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.