House remedies fuel price oversight

In an extraordinary plenary session hurriedly convened on Thursday, the House passed a law extending by another two months a reduction on fuel tax – a matter that should have been addressed before the government switchover.

By a unanimous vote, parliament approved a bill extending until May 4 lower taxes on certain fuel products – by 7 cents per litre for petrol, 8.3 cents for diesel, and 6.4 cents for heating fuel.

Shortly later, the bill arrived at the desk of President Nikos Christodoulides who signed it – in one of his very first acts since taking office earlier this week.

The bill was published in the government gazette in the evening, with the lower taxes applying as of midnight (Friday, March 3).

Normally the House plenum would have reconvened on March 9 after having gone into recess for the presidential elections. But MPs agreed to hold an extraordinary session on Thursday, specifically to pass the fuel tax bill.

The tax relief measure had been in place since March 7, 2022; then in September parliament extended it to the end of this February, and on February 22 the outgoing cabinet had approved a further extension until April 30. But apparently the relevant ministry – perhaps caught up in last month’s presidential elections – did not forward the document to parliament until Tuesday, the last day of February.

That was the day when the lapse was noticed and made it into the news cycle.

Lawmakers sprung to action to rectify the oversight, saying they did not want consumers to pay the full fuel tax – which would have automatically kicked back in – for a single day.

In the House on Thursday, Diko MP Christiana Erotokritou thanked her colleagues from all parties for coming together quickly to fix the issue.

“Consensus was necessary so that the bill went to the plenum, allowing taxpayers not to pay an extra cent more than necessary – be it for one, two or ten days.”

MPs also held a minute’s silence in honour of the victims of the train crash in Greece.

Edek deputy Elias Myrianthous noted that the new finance minister intends to review the issue of fuel taxes as a whole. This was why the finalised bill set a deadline for May 4 for lower taxes – as that date likewise falls on a Thursday, the day of the week when the House plenum convenes. On May 4, Myrianthous said, parliament may if necessary, renew the lower fuel taxes for a third time.

But beyond the mutual backslapping over parliament’s fast reflexes, Greens MP Charalambos Theopemptou introduced a somber note, recalling that two fuel price hikes are on the way.

The first increase is because of ‘fines’ which the EU will slap on Cyprus for the latter’s failure to achieve its targets regarding the penetration of renewables in the transport sector. The second hike has to do with higher taxes related to promoting renewables and ‘green growth’.

Going back to the bill, Akel MP Andreas Kafkalias said it does cover agricultural fuel used by farmers. A government official in parliament replied that farmers can ask for a tax refund, under a scheme handled by the agriculture ministry.

In March last year, when the initial bill passed, the accompanying memo stated that its aim was to provide financial relief to consumers and businesses in a bid to soften the blow from the Ukraine crisis and rising fuel prices.

At the time, then-Finance Minister Constantinos Petrides said cutting the tax on petrol was done to the maximum extent permitted under EU law, adding that Cyprus had the lowest tax rates in the EU for those goods.

In the same week, and just days after the Ukraine war broke out, petrol station owners here warned the public to brace for further price hikes.