Filenews 12 February 2024 - by Angelos Nicolaou
The competent authorities for water taxation are running to catch up, due to Cyprus' obligation to implement the Green Tax Reform. In the first phase, the cost is expected to be borne by drinking water users, but also by those who use water for irrigation of green areas. The government is oriented towards not imposing a tax on irrigation water for agricultural purposes, although this is recommended in the special expert study delivered to the Ministry of Finance and includes recommendations to address the challenges faced by Cyprus and comply with the country-specific recommendations of the European Commission EU 2020.
In the field of water resources management, the study suggests increasing the environment and resource charge, resulting in an increase in the price for drinking water by €0.01/cubic metre, for irrigation water for agricultural purposes by €0.02 and for irrigation water for green areas (such as islands, football fields, hotel gardens, golf, etc.) by €0,02 to €0,23/m²
The Ministry of Finance, following the recommendations of experts, called on the Ministry of Agriculture, Rural Development and Environment to consider as a first stage, only the increase of the water charge for water supply and irrigation of green spaces. The Department of Water Development (WDD) has prepared a proposal to amend the Integrated Water Management (Rights, Fees or Other Financial Considerations) Regulations of 2017 to 2023, in order to implement the environment and resource levy proposed by the Green Tax Reform experts.
An increase in the following categories is proposed: (a) Supply of water supply from government water works (CHE) / government water supply systems to water supply providers – fee increase by €0.01/cubic metre (b) Supply of water supply from water sources other than government water works (boreholes, springs, rivers) – fee increase by €0.01/cubic metre (c) Provision of fresh raw irrigation water by CHDs / government irrigation networks for irrigation of football fields, green spaces – fee increase by €0.06/m² (d) Extraction of irrigation water outside the CHED (boreholes) for irrigation of stadiums, islets, parks, green areas, hotel gardens, golf courses, etc. – Fee increase by €0.02/cubic meter up to €0.23/cubic meter (e) Provision of recycled water for irrigation of football fields, islands, parks, green areas, hotel gardens, golf, etc. – Fee increase by €0,06/cubic meter to €0,08/cubic meter.
The taxation of water was put before the Advisory Committee for Water Management (SEDY) and after the approval of the regulations by the Public Health Service, they must be sent to the Legal Service for legislative review and the proposed fees must be sent to the Technical Committee for the Determination and Review of Fees and Charges for approval.
The proposed Regulations must then be submitted to the Council of Ministers for approval of their publication in the Official Gazette of the Republic. The Regulations are not required to be submitted to the House of Representatives for approval.
The Department of Agriculture is sceptical about the amount of the increase, since the next stage is likely to be to increase the fee for irrigation water for agricultural purposes. It therefore considers it important that the calculation of the increase is properly documented, because there will be justified reactions from farmers.
The Department of Agriculture wonders why there should be an environmental fee in the calculation of the fee for the use of reclaimed water, since the use of reclaimed water itself is at its base, an environmental action. Based on the regulations on pricing and cost recovery mechanisms of water services, recovered (recycled) water is a water service. Therefore, where environmental or resource costs arise, they should be attributed to it as well as to other services.
In general, environmental costs arise when uses (urban, agricultural, etc.) degrade the quality of water bodies and therefore create environmental damage. As a water service, reclaimed water gives water for irrigation use (mainly) and thereby contributes to environmental damage. And that is why it is attributed environmental costs.
The resource cost results from the over-abstraction of groundwater aquifers from water services and thus degrade them quantitatively. The reclaimed water service does not pump from anywhere. On the contrary, it helps to reduce over-abstraction from other services (agriculture, for example).
Hoteliers ask for compensatory measures for new fees
Hoteliers are asking for compensatory measures from the new proposed fees for water supply, but also for irrigation of green areas. According to PASYXE, the increase in the water tax places a significant burden on businesses, including hotel units, and will have a serious impact on their competitiveness. Hoteliers are looking forward to providing compensatory measures to mitigate costs in the hotel industry, due to the fact that the use of water is a much-needed product offered to customers and the planned increase cannot be passed on to customers, because the industry has to face its competitive markets.
For irrigation, lawn, private football and sports fields and private green areas and hotel gardens with the supply of fresh raw water from the CHS / Government Irrigation Networks, the proposed increase is 16.7%, from €0.36 to €0.42m². For the extraction of irrigation water from boreholes, the fee is doubled for irrigation of private green areas and gardens of hotels and residences from €0.10 to €0.20, for irrigation of golf courses from surface sources – licensed private dams from €0.11 to €0.22, while for irrigation of golf courses from aquifers enriched with recycled water from €0.23 to €0.46. For irrigation of lawns of private football and sports fields and private green areas, gardens and houses with recycled water, the charge increases from €0.17 to €0.23 with an increase of 35.29% and for irrigation of golf courses from €0.23 to €0.31 an increase of 34.78%.
Increase in bottled water
The percentage increase of 67% on the fee that water bottlers will have to pay per ton of water they draw from their own boreholes is considered excessive, according to the Cyprus Water Bottling Association, while the Water Development Department underlines that the percentage increase of the fee is large, due to the fact that water bottlers draw water from underground aquifers. who have been classified as degraded in our country. Specifically, for water supply to water resellers in tankers / bottlers, the fees are increased from €0.12 to €0.20, while the same fees are applied by the WDD to potable water sellers with tankers, to drinking water bottlers or for other uses of drinking water.
