Filenews 7 June 2025 - by Eleftheria Paizanou
The bill to impose a carbon tax, known as green taxation, is in the final stages. The technocrats of the finance ministry are putting the finishing touches on the compensatory measures.
According to information from "F", the bill as well as the compensatory measures will soon be put before the Council of Ministers for approval. A competent source said that the government proposals will be approved at the next or the later session of the Cabinet.
The Commission disagreed with the postponement of green taxation, which the previous government committed to in the context of the implementation of the Recovery Plan, through which Cyprus will receive an amount of €1.2 billion by 2026.
Brussels has already been informed of Nicosia's intentions to implement the green tax reduced for a period of about a year and a half. The Cypriot authorities are awaiting the response of the European authorities soon. The bill will impose a carbon tax of 3 to 4 cents per liter on the price of motor fuels until the end of 2026.
If the green tax were applied normally, the state would receive around €60 million from the European fund, however, with reduced taxation, the Republic will receive half of the funding. At the same time, with the carbon tax, the compensatory measures that provide for plans to replace polluting vehicles with electric vehicles as well as subsidies for vulnerable groups of the population will be implemented.
They want to catch up with the Parliament
The government wants the green tax to be approved as soon as possible, so that it can be submitted in time to Parliament and voted before the closure for the summer holidays. It is recalled that the green taxation measure will be in place until the end of 2026, as in 2027 all member states will have to implement the European pollutant market system.
It is estimated that the increase in fuel will be between 18 and 20 cents per litre, but the Cypriot authorities have secured the consent of the Commission to remove the percentage of the green tax that consumers will pay in previous years. That is, Cypriots will be asked to pay less in 2027 than the rest of the Europeans, as they will pay a year and a half before the carbon tax.
Waiting for waste disposal
As is well known, the waste landfill tax will also be reduced. The Ministry of Agriculture has prepared a relevant bill which provides for €10 per tonne. It is estimated that each household will be burdened with €22 per year.
It has not yet been clarified whether the specific bill will be approved at the same session of the Ministerial Cabinet where the final decision on the green tax will be taken. The Government's goal is for both pieces of legislation to be brought to Parliament at the same time, so that they can be discussed together and implemented at the same time.
If this is not possible, because of tight timetables, then Parliament will first promote the green tax and then the landfill tax. It is worth noting that the initial plans for the landfill tax were €35 per tonne by 2028 which would increase by €5 per tonne every year.
In addition to the carbon tax and the waste tax, the green water tax will also come into force, which will be €0.01, while next year the overnight tax on hotels will also come into force, which will amount to €2.50 per night. An amount, as we have been told, is much lower than that which other European countries impose.
