Filenews 18 September 2024 - by Angelos Angelodimou
Finance Minister Makis Keravnos does not seem willing to go without a fight on the issue of imposing a tax on fuel, in view of the green transition.
Although the preparation of the relevant bills is progressing, the Minister of Finance seems to understand that such a development will be unfavorable for Cypriot consumers – especially at this time, when everyone is calling for continued measures to support society – and therefore puts pressure on his European partners so that green taxation on fuels is either avoided. or extend (again) its entry into application.
As we are told, the issue of green taxation on fuels is behind the intervention of the Minister of Finance at the last Ecofin meeting.
Among other things, Makis Keravnos had said that the planning of public investments should not threaten fiscal stability. The translation of this statement is that if a state makes such an investment, as the green transition is considered by the European institutions, it should not undermine the stability of public finances.
Especially in a small economy, such as Cyprus, in which any change of this kind can upset the balance and cause fiscal turmoil. Characteristically, Mr. Keravnos noted that in the case of member states with the special characteristics of Cyprus – such as insularity and distance from the rest of the EU member states – the needs for public investments (towards the green transition) are even greater, thus exerting increased fiscal pressures.
Wanting to be more specific, the Minister of Finance pointed out that proposals such as the legislative package "Fit for 55" do not take into account the particularities of small states and cited as an example the obligation to impose taxation on motor fuels, at the same time that Cyprus does not have an adequate public transport network.
This point is particularly crucial, given that Cyprus is dependent on fuel and automobiles, while at the same time it does not have functional public transport, and therefore alternatives, in terms of the way citizens move.
According to reports, Makis Keravnos will continue to exert pressure in this direction on European partners, especially since others had agreed to move forward on this issue, without giving any compensation or securing any kind of exemption.
For better or worse, bills are being prepared
At the same time, however, as "F" wrote yesterday, the preparation of the relevant bills is progressing and in case the effort of the Ministry of Finance does not bring any result, the green tax will be imposed within 2025.
Specifically, during the meeting of Mr. Keravnos with representatives of the opposition parties DIKO, EDEK and DEPA, it was mentioned that in relation to green taxation on fuels, the Government will have the bills ready by the end of 2024 and it is estimated that they will be submitted to Parliament in early 2025. This taxation is a commitment of the Republic in the European Union in the context of the implementation of the Recovery Plan.
The original plan was to impose this tax earlier. During the discussion with the members of the coalition parties, there was concern about the spending in the Local Government Authorities, as well as the fact that it is estimated that some are not sustainable. In order for some changes to be made, the Ministry of Interior should promote amendments to legislation.
