Pump prices drop after tax freeze reinstated

The House on Thursday passed an extension to freeze the consumption tax imposed on fuel, correcting a costly political error which pushed up petrol prices by 10 cents per litre for two days.

Earlier in the week, politicians were falling over themselves to correct the fumble that pushed petrol prices up after Parliament failed to pass a government extension on the tax freeze.

The mishap took place following the outgoing Cabinet’s decision on 22 February to extend the freeze on consumption tax by two months, MPs attributing the delay to the government changeover.

The tax freeze ended on 1 March, resulting in prices going up overnight.

Prices are expected to be readjusted by Friday.

Following the green light from the House, the freeze on fuel tax will be extended until 4 May.

Christiana Erotokritou, chair of the House Finance Committee, argued that the bill needed to be officially tabled promptly to be approved by the plenary, attributing the omission to the Finance Ministry for failing to follow well-worn procedures.

The House had been in recess since mid-December, ahead of Christmas and the Presidential Election in February.

“Parliament is not a post office; it is not always in session; the constitution stipulates that bills must be submitted to the plenary,” she told CyBC.

The Anastasiades administration blamed the House, arguing that they had done their part.

The apparent oversight concerns a freeze on consumption tax on fuel introduced in March 2022 to buffer a hike in fuel prices powered by the war in Ukraine and sanctions on Russia.

Under the cost-of-living measure, 7 cents per litre is reduced from the price of petrol, 8.3 cents for diesel and 6.4 cents for heating oil.