President warns of impending fuel price surge
President Nikos Christodoulides on Thursday warned of large increases in the prices of motor fuel at the end of the month, following the end of reduced consumption tax on fuels, combined with the imposition of a green tax in the exact same period.
Reductions in consumption tax end at the end of March, which is expected to raise the prices of motor fuels, gasoline and diesel by 8.3 cents per litre, with the possibility of 5 more cents being added as a result of the green tax.
According to the draft law for the imposition of a carbon tax on fuel, which was put to public consultation on Wednesday, the finance ministry’s aim is for the proposed green tax on fuel to come into force from April 1.
This date is the government’s deadline to introduce a carbon tax on fuel based on the Recovery and Resilience Plan, which will be difficult as the bill was only submitted for consultation a day ago and will be completed on the 19th of the month, leaving only about ten days for the House and the Cabinet to approve it.
If this is achieved on time, fuel prices are expected to go up by at least 14-15 cents per litre, with gas station owners publicly warning of further potential increases due to the receipt of more expensive fuel loads.
On Wednesday afternoon, the average Cyprus price of 95 octane gasoline amounted to €1.38 per litre, and of diesel to €1.51 per litre.
Despite the anticipated increases, prices are not expected to surpass the record set in July 2022, when they peaked at €1.83 per litre.
However, a new record in terms of the price of gasoline and motor fuels in general is considered a given in the next few years, as the green tax will increase yearly.
According to the Carbon Tax on Energy Products Act 2023 which was put to public consultation on Wednesday, the carbon tax on motor fuels will increase from 5 cents this year to 7 cents per litre in 2025 and to 10 cents in 2026.
It is predicted to reach 25 cents by 2033, on which VAT will also be imposed. A carbon tax under the same bill would also be levied on manufacturing fuels and on polluting industries, rising to 7 cents per litre this year and rising annually until 2033.