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Six cents per litre shaved off car and heating fuel tax (Updated)

The reduction in fuel consumption tax was part of the state's spending spree

By Evie Andreou

The parliament plenum on Wednesday unanimously approved a bill to reduce the tax on motor and heating fuel by almost six cents per litre

The reduction will come into effect on December 18.

In an extraordinary session, the House plenum voted in favour of the 5.95 cent per litre reduction in consumption tax on petrol, diesel and heating fuel. The tax reduction concerns five cents, but adding the reduction in VAT the total amount comes to 5.95 cents per litre.

The proposal, tabled by the leaders of Disy and Diko, Averof Neophytou and Nicolas Papadopoulos, was opposed by the government, which wanted to cut the tax on income from interest rates from 30 per cent to 17 per cent instead. The reduction in tax on petrol, diesel, and heating fuel will cost the state €48.4m – €57.5m including VAT.

Although the bill was unanimously approved, most deputies, apart from Diko and Disy MPs, expressed reservations how far the measure would positively impact vulnerable groups.

Edek leader, Marinos Sizopoulos, said that the measure would serve the wealthy and that the tax money could have been used instead to support vulnerable groups and pensioners.

Edek MP, Elias Myrianthous, expressed concerns that the petrol companies would find ways to benefit from the tax reduction. “I hope I’m proven wrong,” he said.

Main opposition Akel, too, said that if they had a choice, they would choose to support the most vulnerable groups instead.

Akel parliamentary spokesman, Giorgos Loukaides, said that the fuel tax reduction proposal was made to counter the government’s suggestion to reduce tax on deposits. The latter, he said, would benefit those with millions while the reduction in fuel taxes meant a horizontal distribution of benefits.

“As parliament, we have the ability to cut spending,” Loukaides said, adding that instead of Diko going to Akel to see how the relative reduction in revenue would be more beneficial in social terms, it chose to turn to Disy.

The Greens’ MP, Giorgos Perdikis, expressed concerns that the six cents “would disappear in the profiteering pit” and that the reduction would not be passed on to consumers.

He also said that ways should be found to stop the “frenzy” of Greek Cypriots going to the north to fill their cars.

“The reduction in taxes on fuel was our proposal and we cannot vote against what we were calling for,” Perdikis said, adding that the €45m could be used for widowers’ pension for the next 20 years.

The head of the Citizens’ Alliance, Giorgos Lillikas, said that the measure was unfair on pensioners who do not drive. He proposed, however, that the government ought to look into a more serious reduction to tackle numbers of Greek Cypriots going to the north to fill their cars with petrol, which costs the state millions in tax revenues.

Lillikas called for stricter checks on petrol companies so that fuel prices are in line with international oil process.

Neophytou and Papadopoulos defended their proposal, arguing that it would, in fact, benefit vulnerable groups and that the government’s proposal to reduce tax on deposits would only benefit those few who have deposits.

Taking a swipe at those MPs who argued the tax cut would not help the more vulnerable, the Disy leader wondered how the proposal would benefit only those driving limousines.

“Let’s stick to the positive aspect of the proposal. The reduction would benefit professionals who are on the wheel 18 hours per day,” he said. Those who own limousines, he said, only drive around a kilometre per day.

“It will benefit Yiannis from Agros who drives his twin cabin pickup truck to Nicosia daily,” Neophytou said.

Papadopoulos said that the proposal was based on suggestions by the House commerce committee. Other EU countries, he said, do not impose a 15 per cent tax on fuel but that does not mean they are not interested in helping vulnerable groups.

Fuel prices have gone up, he said. “We have the most expensive prices in the market,” Papadopoulos said, adding that this was due to monopolies that must be dealt with.

He also said that there was no special deal with Disy and that his party is willing to cooperate with any group.



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