Green taxes by end of 2024 (updated)

By Jonathan Shkurko and Tom Cleaver

Green taxation will begin by the end of 2024, President Nikos Christodoulides said on Tuesday addressing what he described as “a misconception” that it would start on April 1.

“Because people are under the impression that the green taxation will start on April 1, I want to confirm it will be implemented by the end of the year and that we are also working on compensatory measures and incentivisation,” he said before a cabinet meeting.

Compensatory measures for consumers, meant to nudge businesses and individuals toward energy saving and other environmentally friendly habits, are in the process of being hammered out by various stakeholders.

Christodoulides urged his cabinet to start discussing them during Wednesday’s meeting.

“I want to hear your recommendations,” he told ministers before the start of the cabinet meeting.

Meanwhile, Finance Minister Makis Keravnos said the government is in a “period of reflection” regarding new measures to combat the high cost of living, adding that he hopes there will be some announcements in this regard by the end of the month.

However, he said, there is “nothing ready that I can reveal or not reveal” yet.

Speaking on the matter of the fuel price subsidy, which is set to expire on April 1, he said, “we have said many times that the European Union, the International Monetary Fund, and other organisations which still supervise us have indicated that one-size-fits-all measures should be abandoned.”

In addition, he said, the EU Finance Council had come to an agreement that member states should refrain from such measures in the future.

“For fuel taxation, as we have already announced in a timely manner, the subsidy ends at the end of March,” he said.

He was swift to point out, however, that “in Cyprus, we still have the lowest petrol and diesel prices in the entire European Union, but the government is monitoring the developments, and we are ready to process and see some more targeted measures.”

With this in mind, he said he believes the “green tax” will be implemented in the autumn, likely in September or October.

“For this reason, I don’t really know why the idea that a green tax will be introduced on April 1 has invaded public debate. On the contrary, we still have time to study the compensatory measures which will be introduced alongside the tax,” he said.

At the beginning of March, he had offered assurances that the green transition and anticipated taxes would pose no threat to households or businesses.

The Green Party was quick to point out what it perceives as hypocrisy in Keravnos’ statements, saying it was “particularly saddened” by his words.

“In a country where natural habitats are being used for consumption, where bulldozers trash the Natura 2000 areas and whoever can erects cathedrals and restaurants on top of them, no minister can ask people or businesses to pay a tax in the name of the environment,” they said.

They added, “we have been warning for decades and the rulers were all deaf. Now, they are rushing to blame their mistakes on ordinary people.”

House energy committee chairman and Disy MP Kyriacos Hadjiyannis was also scathing in his assessment of the government’s actions, expressing his “shock” at the expiry of the fuel tax subsidy and the possible future implementation of a green tax.

He accused the government of acting with “scattered responsibilities and intentions” and called on it to instead implement “comprehensive tax reform for fairer taxation.”

He added that the government should conduct a “thorough investigation” into the consequences of the changes both for Cypriot households and businesses.

Meanwhile, Akel MP Costas Costa said “it is not the time” to impose green taxes due to the high cost of living, and said ordinary people are “being called to pay for incompetence, sloppiness, serving interests and scandals.”

He also said plans were afoot for green taxes to be levied on water, hotels, aeroplanes, car fuel, industrial fuel and rubbish.

“The only thing left is to put a tax on our breath,” he said.