Cabinet on Friday extended a cap on the consumption tax imposed on fuel at the pump until January 15, 2023.
The cabinet meeting, chaired by acting president and house president Annita Demetriou, kept the existing reduction in the tax, which was meant to expire on September 30.
Finance Minister Constantinos Petrides said the measure will see a reduction of seven cents per litre on petrol and on diesel of 8.3 cents per litre. Heating fuel will see a reduction of 6.4 cents a litre.
He pointed out that with the continuation of the measure, Cyprus is the country with the lowest consumption rate on fuel.
But, Petrides warned that the coming period will be difficult for the economy due to the effects, internationally, of the ongoing war in Ukraine.
He also stressed that the government’s measures do not solve the problem and again called on people “to get used to cost cutting”.
The minister added that regardless of the consumption tax, fuel prices since their peak last July, have decreased and based on the latest data this reflects a reduction of 19 per cent for petrol and 8 per cent for diesel and heating fuel.
The additional fiscal cost is expected to amount to €6.5 million, while the total fiscal cost together with the previous cost of implementing the measure amounts to €33 million.
It was introduced earlier this year in response to spiralling fuel prices.
The cabinet said Petrides will submit the bill for the extension to parliament as an emergency measure.
The measure is considered necessary due to the challenges faced by households and businesses, a cabinet note said.
Commenting on electricity prices, Petrides said that the third package of measures to deal with them has been set in motion. He said the first concerned the subsidy from the EAC, the second the reduction of VAT and the third concerned the subsidy from the state on the price of electricity to cover the increase in VAT from 5 per cent to 19 per cent, as well as the 22 per cent incremental increase imposed by the EAC.
Petrides also called on business and households to embrace government plans for the installation of solar panels, as part of the EU directives to save energy and fight inflationary prices.
“The government’s total measures to support households and businesses are estimated to exceed €400 million,” he said.