Finance Minister Harris Georgiades on Tuesday ruled out any notion that the government intends to revise taxes for cheaper petrol as motorists go north.
Georgiades was addressing MPs’ concerns regarding queues of Greek Cypriots at crossing points, waiting to reach a Turkish Cypriot petrol station to fill their cars with cheaper petrol. The price of petrol in the north is almost half that of the south.
He said there is a significant difference in the price of a series of products and services such as food, medicine and hotels in the north.
An economic crisis in the north, triggered by the plunging Turkish Lira, has compounded the situation for Turkish Cypriots and means that Greek Cypriots who venture across the Green Line get more for their euro.
Georgiades told a parliamentary committee: “Problematic situations, such as those in the occupied areas, cannot determine government decisions. I do not think we can deal with the problem with fiscal instruments".
He said state revenues from fuel taxation are around EUR 390 mln and added that a tax deduction of one cent equals a loss of revenue of EUR 10mln for the state.
The Minister explained that in order for a reduction to be felt by the people, it will have to be substantial which would mean that the financial impact on the state would be great.
Georgiades left open the possibility of a revision of the fiscal policy on fuel in the event that international prices rise upwards, which is not on the horizon.
He argued that Cyprus has lower petrol prices compared to other EU countries.
According to data quoted by Georgiades, the consumption tax imposed on diesel in the EU is at least EUR 330 per 1000 litres, while Cyprus imposes an EUR 450 consumption tax, the 15th lowest in the EU28.
In the EU, the minimum tax on unleaded petrol is EUR 359 while in Cyprus it’s EUR 479, making the country the 9th cheapest.
VAT on both oil and gas is at 19% and is the third lowest EU rate, according to Georgiades.
Georgiades explained that the price of fuel before taxation is more expensive in Cyprus than in the rest of the EU, but after taxation, both petrol and diesel are cheaper than in the EU.
Specifically, he said, on average, petrol in Cyprus is sold at EUR 1.318 per litre against EUR 1.473 / litre in the rest of the EU and diesel costs around EUR 1.327 against EUR 1.365 in the EU.
Turkish Cypriot petrol stations are selling 95 octane petrol at around 70 cents per litre.
The finance minister agreed with committee members that the government should step up efforts to promote the necessary legislation to encourage greener choices such as electric cars and Liquefied petroleum gas (LPG).
