Statement by the General Secretary of AKEL S.Stefanou following the meeting of the Parliamentary Finance Committee on the Bill Proposal for ending double taxation on fuel

 

 

30 May 2022, AKEL C.C. Press Office, Nicosia

AKEL has tabled a Bill Proposal to end the double taxation on fuel by the end of the year. Namely, to end the imposition of VAT on excise duty.

There is another AKEL Bill Proposal, which is being discussed in the Parliamentary Trade Committee concerning the extension of the grounds for issuing a cap on fuel. This law is different from the one on other essential goods.

We have tabled these Proposals because we have concluded that the government doesnt have the necessary will to confront, as much as possible, the wave of price increases that exists and is particularly evident on energy issues.  These price hikes are being passed on to other essential goods, with the result that part of the household budget is being eroded due to the increase in the cost of both electricity and fuel and other basic goods.

We have ascertained this lack of will on the part of the government with the questions we posed today. When we asked the responsible Ministry whether it had approached the EU to assert any exemptions in order address the price increases in electricity and fuel, the government’s answer was no. The government invariably invokes the European acquis as an excuse, at the same time as the European acquis itself and a number of EU decisions aim at assisting member states address price increases in basic goods and raw materials.  Nonetheless, we see the Government has done absolutely nothing.

As AKEL, we will insist on the Bill Proposal, while there are also Bill Proposals that have been tabled by other parties that on the electricity issue. We will await the Government’s replies to our questions and next week the debate will continue in the Finance Committee.

QUESTION: The Finance Ministry official has replied that if your proposals were to be adopted it would mean that the budget cannot be closed and that it violates the European acquis.

SS: We have replied that the EU Acquis gives the possibility, in exceptional cases, even for the suspension of the fiscal restrictions. The Government’s easy answer is to declare “but you know, that is not provided for by the EU”.

I repeat, the EU itself has approved specific decisions to permit member states to agree to exemptions to help society and the economy. A number of member states have already had significant exemptions approved. Spain and Portugal managed to get exemptions from energy pricing, and as a result, electricity bills in these two countries have been reduced by up to 40%. The Prime Minister of Spain characterised this exemption, which these two countries have asserted and obtained, as a great victory. We on our part have seen nothing.

I would like to recall that the only time the government acted was when we, as opposition parties, submitted the proposal to reduce VAT from 19% to 9% on electricity.  The government claimed that it could not be reduced because there is a European directive.  However, when we forced them to do so, they finally got the option of a reduction. So there is potential and room for action to be taken.

What doesn’t exist a will on the part of this Government, just as there is also no will to exercise control over the oligopolies and cartels in the fuel sector. It is inconceivable that over the last three months the international price of oil has been falling, while the retail price of fuel has been rising continuously. The opposite has never happened in Cyprus, namely that the price of oil increases internationally and retail prices in Cyprus decrease.

The opposite happens. As soon as international prices increase, prices in Cyprus immediately increase as if new cargoes were coming in by speedboat. When fuel prices fall internationally, it takes a long time for them to decrease in Cyprus too as if done deliberately.