Cyprus will implement a reduced version of its planned carbon tax in the coming weeks rather than suspending it completely, Finance Minister Makis Keravnos has confirmed.
Speaking to Antenna TV, Keravnos said it would be impossible for the European Commission to accept a full suspension of the carbon tax, commonly known as the ‘green tax’, due to numerous recommendations it had previously made to the Republic.
The Ministry of Finance is examining various options, Keravnos said, including the postponement of the tax and the subsequent removal of the related grant from the Recovery Fund, though he noted this would be difficult for the EU to accept.
As an alternative, the government is considering reducing the green fees by 50% to ease the burden on fuel consumers. Specifically, instead of imposing a 6-cent per litre tax on fuels and waste fees, it may be reduced to 3 cents per litre.
The minister also indicated they are exploring the possibility of removing fees associated with a new European directive set to be implemented in 2027.
Keravnos stated that the green fees will be implemented in the immediate future, though he did not provide a specific timeframe.
He added that the Finance Ministry’s proposal will soon be presented to the Cabinet, making it clear that “there will be green taxation on motor fuels and waste, but it will be reduced compared to the original plan”.
Yesterday, President Nikos Christodoulides told Omega TV that the Republic was in consultations with the EU on the matter. According to the President, the European Commission is considering two scenarios: either an official suspension of the taxes, which would result in the withdrawal of funds that Cyprus would receive from the Recovery and Resilience Facility, or the partial imposition of the fee at a significantly lower amount.
Christodoulides noted that the EU would provide its response to Cyprus within the week, emphasising: “Because the Republic was behind on its targets, the Commission requested that specific goals be achieved within the framework of the fund, and these goals are linked to money that the Republic is entitled to from the Recovery Fund”.
The reduced carbon tax is expected to be implemented within the next few weeks as part of Cyprus’s commitments under its Recovery and Resilience Plan.
