Filenews 22 May 2024 - by Eleftheria Paizanou
While studies, contacts and consultations on the imposition of a green tax, also known as a carbon tax, and the imposition of a residence tax continue, in the context of the public consultation on the two pieces of legislation last March, stakeholders made written comments in an attempt to influence the government's proposals.
The first bill to be prepared will provide for the imposition of a carbon tax on energy products. Among other things, the bill introduces a carbon tax on motor fuels of five cents a liter from this year. This tax will reach 25 cents a liter by 2033, with additional VAT.
OEB, through its intervention in the public consultation, requests the addition of an article to the bill which will determine that the revenues generated by the imposition of the carbon tax will be used for the implementation of compensatory measures. In fact, it proposes the creation of a National Special Fund, which will end up with the revenues that the state will receive from the imposition of green taxation.
In the same vein, the position of the Cyprus Energy Agency, which also proposes the creation of a Special Fund for green tax reform, which will rationally manage revenues arising from green taxation. It also indicates that the practice of revenues ending up in the Fixed Fund of the Republic poses risks of not achieving the objectives of the green tax reform.
It is worth noting that the compensatory measures prepared by the Ministry of Finance are under preparation to balance the impact that consumers will have from this tax.
The exceptions
Regarding the exemptions in the imposition of the carbon tax, the bill provides that this charge will exempt gas oil, which will be coloured and traced as marine oil and will be used for navigation in EU waters and electricity generation.
On this aspect, OEB indicated through its memorandum that it is impossible to exclude marine fuel exclusively within EU territory. It should be clarified that the exemption will apply regardless of where the oil is burned. In addition, it proposes to exempt low indirect land-use change biofuels, bioliquids and biomass fuels from green taxation.
Later the accommodation fee
Suggestions were also made in relation to the bill that provides for the imposition of a residence tax of €2.50 per daily use. PASYXE suggests that the implementation of the accommodation tax should be imposed in 2026 and not this year, as in 2024 and 2025 agreements on hotel prices have already been signed with tour operators and tourism operators.
At the same time, PASYXE proposes the creation of a fund in which this fee will be deposited, so that the revenues collected will be invested only for actions related to the improvement of the tourist product and hotel infrastructure.
In the event that this fee is applied this year, compensatory measures should also be announced. Among other things, it proposes granting a discount on electricity, reducing municipal taxes and sewerage charges, etc
For its part, OEB requests that before the accommodation tax is applied, at least one year's notice be given so that tour operators are informed in time. It also insists on the creation of a special fund to finance compensatory measures and environmental policies.
And other suggestions
The Energy Bureau notes in its own memorandum that this fee will be horizontal, without taking into account the impact caused by the activities of each unit on the environment.
On behalf of OEB, it was said that the accommodation tax should be called a green accommodation fee, in order to be accepted by visitors.
At the same time, PASYXE calls for tourist accommodation that implements energy and environmental management systems to be exempted from the accommodation tax in hotel units. It also says the law should act as an incentive for hotels and tourist accommodation establishments to reduce their carbon footprint.
Finally, OEB also requests that tourist accommodation establishments that voluntarily apply energy and environmental management systems be exempted from this fee, stressing that horizontal enforcement will not contribute to the effort to enhance the sustainable and sustainable development of tourism.
Accommodation fee
Regarding the provision that the accommodation tax is paid by the resident before his departure, with the issuance of a special element-proof of collection of accommodation tax by the manager of a hotel or tourist accommodation or self-catering accommodation, PASYXE disagrees with the imposition of the tourist tax only on tourists staying in hotels of the Republic of Cyprus, as a number of tourists end up in non-licensed accommodation in the occupied areas.
In fact, it suggests that a tourist or travel fee should be imposed on everyone, i.e. whether it is for holidays, business trips, or accommodation in rented accommodation (eg airbnb). The tourist fee, according to hoteliers, is considered fairer to be paid to those who enter the Republic of Cyprus and have an environmental footprint. It also proposes exempting Cypriots who buy air tickets from Cyprus from the airport fee.
