Statement by St. Stefanou, General Secretary of AKEL after the meeting with the Minister of Energy

The government is in a hurry to impose new taxes at a time when energy prices are high

7 March 2024

We had a very interesting and all-inclusive meeting with the Minister of Energy and his colleagues – at a very critical and sensitive period – regarding energy policy in Cyprus and in relation to the global energy crisis and the energy prices paid by consumers in Cyprus.

We discussed issues concerning the possibilities, opportunities and measures that should be taken to reduce energy prices in Cyprus. Although the issue of energy prices is not so much in the competence of the Minister of Energy, but rather the Ministry of Finance, we discussed these issues as well.

I briefed the Minister in relation to the specific proposals submitted by AKEL on the issue of reducing electricity and fuel prices. I would like to recall these proposals.

First of all, there is the proposal to reduce the VAT rate from 19% to 9%, a measure which was approved by Parliament on a proposal submitted by AKEL, but the law was declared unconstitutional by the Supreme Court. What we are saying to the government is that it should take the legislative initiative and come up with a proposal to reduce the VAT rate from 19% to 9%.

This proposal can be substantiated before the European Union so it could accept this request. And we believe that if it is asserted by the Republic of Cyprus in the European Union, it can be achieved and eventually we can move forward with the reduction of the rate.

The second proposal that we are making is the taxation of exorbitant profits, both the profits of banks and energy companies. The money that will be collected by the state, in a specific way, should be put into the development of specific and targeted policies to help citizens’ access to energy, to combat energy poverty, which in Cyprus is above the European Union average.

The third thing that we are asserting is the full utilisation of the revenues generated for the state from pollutants. After all, there is European and Cypriot legislation in place that requires the use of at least 50% of the revenues for the fight against energy poverty, for the creation of infrastructures for the issue of energy, but also for the issue of the promotion, penetration and installation of renewable energy sources.

We have discussed the issue of providing support to semi-governmental organisation the Cyprus Electricity Authority to enable it to work towards both infrastructure development and the penetration of renewable energy.

We discussed the issue of holding competitive tenders, which will reduce the prices of electricity production from RES, and at the same time we also discussed the issue of green taxes, as they are called. For consumers, of course, they will not be so green; they will severely affect the pockets of consumers, both households and businesses.

I should say that the government has put this issue up for public consultation, but at the same time it has not brought forward any compensatory measures in relation to the taxes. I should make it clear that AKEL will insist that the compensatory measures also come in, so that we know how the whole equation will work, because taxes are high.

At the same time, we note and have discussed this with the Minister that in the EU there is still no decision regarding taxation on the issue of energy and the green transition. We find it a bit of an oxymoron that the Republic of Cyprus is in a hurry to impose taxes, especially at a time when energy prices are so high. I should also say that we are waiting to discuss this issue with the government and, at the same time, we will have to see what will happen with the issue of the measures in force until the end of the month, whether there will be a further extension of these measures. We are asking for them to be extended.

Think what will happen if the measures are ended and at the same time the green tax is decided, which will cause prices to skyrocket.
So there is an important issue that should be discussed by the government as soon as possible. We are ready with our proposals to see how to move on the whole issue.

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