Despite efforts by the current government to fully postpone green taxation, which the Anastasiades administration had built into the framework for Cyprus to access recovery and resilience funds, the EU does not appear to be amenable to any postponements, it was reported on Wednesday.

Instead, the so-called “green” taxes are likely to be walked back between 50 and 66 per cent, after agreements reached with the EU commission, according to reports.

The R&R funds were supposed to be used for creating a sustainable transport system and imposing energy upgrades to buildings, among other things, which the state had not succeeded in doing, and fallout for the public is sure to ensue, House environment committee chair and Greens MP Charalambos Theopemptou told the Cyprus Mail.

Despite the so-called “green taxes” not being directly mandated by the EU, the fact that the state itself had committed to them by writing them into the R&R funds framework as a condition for their receipt, meant the money now has to be sourced, Theopemptou explained.

The EU Commission had signalled that the €50 to €60 million the country will receive from the R&R fund cannot be foregone in exchange, to cover the amount of the self-imposed “green” taxes.

The taxes cover four sectors: waste disposal (landfill tax), fuels, water, and overnight hotel stays.

For waste disposal, the original agreement had been to tax garbage truck contents at €35 euros per tonne, while municipalities already pay about €40 per tonne, to dump the rubbish at various landfills and management facilities, Theopemptou said.

“This means you would effectively double municipalities’ expenses for the removal of garbage and the municipality would have to recover these expenses from its constituents.”

Not only was the approach wrong, impeding efforts to encourage the pay-as-you-throw scheme, but the amount suggested [by the previous government] was huge, Theopemptou said. Moreover, municipalities are not even legally permitted to raise their tariffs for services beyond a certain percentage.

However, it now appears that after consultations with the EU commission, the state has succeeded in decreasing the landfill tax to €10 per tonne, Philenews reported.

Each household is now estimated to have to pay €22 annually for the waste management tax, that is, around €1.70 per month.

But the two third reduction is not as great a concession as it may appear on first reading.

“Let’s not forget we are awaiting indictments from the EU over our [failed] waste management programmes, as well as the non-implementation of [agreed upon] sewerage system plans. I suspect the aim [of the taxes] is to collect revenue for payment of these fines,” Theopemptou pointed out.

As for the tax on petrol, Theopemptou charged that this approach was also entirely wrong.

“In 2020 we made it our aim that 10 per cent of energy for transport would by now come from renewable sources (RES) and we have reached half of that. And soon we will have to buy [transports] emissions rights, as the electricity authority does, costing over €100 million.”

The suggestion for “green” taxation on fuels was likewise simply a means to source this money, effectively a fine, the Greens MP said.

Since many EU states fell short of their RES energy goals and because the EU had decided to extend an energy emissions (rights) trading scheme [ETS] to other sectors, such as transport and heating fuels [the so-called ETS2] further taxes loom on the horizon.

The revised emissions trading scheme [ETS2], set to be launched in 2027, requires importers of heating or transport fuels to purchase emissions, or carbon, rights, and the subsequent rise in costs is expected to be passed down to consumers.

For the time being, the commission seems to, at least, be considering a request by the state to reduce the green tax on fuels by 50 per cent.

According to these metrics, in the coming weeks, an increase of three to four cents per litre is expected on the price of fuel. The ministry’s original plan had been for this tax to range between six and eight cents per litre.

The ministry of finance is reportedly working on a bill for the imposition of the reduced transport fuel tax for a period of one and a half years.

The bill is expected to be approved by the cabinet and to be submitted to Parliament in June. The totals for the 2026 tax are still being calculated.

Participation in the ETS2, mandatory for all EU states, essentially imposes a carbon tax on polluters (at the business level) on a rising scale. While it is difficult to predict its exact outcomes, experts estimate that it will mean that the cost of motor fuels will increase by to 18 to 20 cents per litre across the board.

After consultations, the EU has agreed that Cyprus is permitted to recoup part of this fuel tax from amounts collected via its self-imposed green taxes in 2025-2026. In other words, Cyprus will pay the 18-20 cent/litre hike, minus the green tax on fuel paid out over the next year and a half.

As for water, a green fee of €0.01/cubic metre has been approved, as well as an overnight stay fee for hotels of €2.50 per person, per night, which goes into effect in 2026.