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Cyprus

FUEL TAXES will increase by almost 10 per cent by June as part of Cyprus’ obligations to the EU, with no further margin for delay, ministers of finance and commerce announced yesterday.

The ministers’ announcement at the House Commerce Committee was met with a wave of hostility, especially from opposition parties DISY and EDEK.

Cyprus had managed to achieve over two years’ postponement of the measure but yesterday it was made clear that there could be no further delay. The tax increases also involve foodstuffs, water and pharmaceuticals.

There will be an average 10 per cent increase on the total price of fuel, with around seven cents per litre on unleaded petrol and nine cents per litre on diesel.

According to Commerce Minister Antonis Paschalides, the EU has given Cyprus a two-month postponement to impose the new increases – but that’s it.

However, Paschalides insisted Cyprus would still remain one of the cheapest EU states when it comes to consumption tax on fuel.

“My ministry’s main concern is to closely observe the situation when the increases are imposed to ensure the change in prices isn’t exploited and there is no profiteering,” said Paschalides.

“I can assure consumers that our ministry’s services will be very vigilant and if needed, we will intervene as is our right to do so.”

He was keen to underline the results of a recent survey by the University of Cyprus, which showed last year’s fluctuations in fuel prices were on par with other European states.

Some MPs suggested postponing the increases further and counterbalancing them with measures to support the public.

Commerce Committee Chairman Lefteris Christoforou of DISY said the government’s intention to increase fuel tax will have dire effects on the Cypriot public and the economy; especially at a time when unemployment figures are rising dramatically.

He added that if the new increases were passed by majority vote, DISY will respond with proposals for counterbalancing measures – such as scrapping road tax.

“We feel Cyprus should exhaust all margins within the EU to seek further delays,” said Christoforou. “Cypriot consumers cannot bear the brunt of further increases.”

EDEK’s George Varnava agreed and pointed out that consumers would also have to deal with the chain reaction of events that will follow these increases – like last year when increases in oil prices resulted in a rise in the price of basic products, with all involved blaming the high oil prices.

“Instead of helping the public in these times of financial crisis – like other states have done – Cyprus is taking more from them,” said Varnava. “They say we are the third cheapest country in the EU when it comes to fuel tax, but they forget to take into consideration the lack of alternative energy sources and a satisfactory public transportation system.

“Instead of the state supporting its people, it is the other way round. We are calling on the government to seek further postponement of the measure.”

But leading party AKEL deputy Andreas Gavriel called on MPs to decide: “Do they want economic consolidation or do they want all the state’s income to be given in social benefits at the expense of the economy?”

Asked to comment on suggestions to scrap road tax, he added, “We can’t take from one basket and put it in the other. Our main aim is economic consolidation.”

The Green Party’s George Perdikes agreed.

“Former President of the Republic, the late Tassos Papadopoulos once said that European bureaucrats will never bend the rules when it comes to finances,” said Perdikes.

“Those who are requesting a postponement are not thinking of Cyprus’ best interests. If it is postponed now, we will find it later.”