The imposition of a green tax without any compensatory measures and infrastructures is punitive for society

 

Letter of the General Secretary of AKEL Stefanos Stefanou to Finance Minister Makis Keravnos

6 June 2024, AKEL C.C. Press Office, Nicosia

The General Secretary of the Central Committee of AKEL Stefanos Stefanou in a letter to Finance Minister Makis Keravnos proposes the re-evaluation of the Recovery and Resilience Plan, especially with regard to the issue of green taxation. Reiterating AKEL’s concerns both with regard to the hasty decision to impose so-called green taxes and the absence of any compensatory measures, Stefanos Stefanou stresses that the achievement of this strategic goal should be implemented with a more comprehensive web of measures and policies that put more emphasis on infrastructure for changing behaviour – more environmentally friendly – and less on measures of a punitive nature. “The imposition of taxes will act more as a punishment for society, which will be burdened with new economic burdens at a time of inflation and price rises”, the General Secretary of the C.C. of AKEL points out.

The letter of Stefanos Stefanou to the Finance Minister follows:

First of all, I would like to thank you for your letter of reply in relation to the concerns and worries raised in the letter I sent you, dated 19 April 2024, on the issue of the green tax reform.

However, it is with concern that I note that from the data provided in your response, our concerns are confirmed both as regards the hasty decision taken to impose so-called green taxes and in relation to the absence of specific compensatory measures that should have accompanied the proposals.

Allow me to point out the following:

Firstly, the debate on the revision of the Energy Taxation Directive within the context of the European Green Deal (“Fit for 55”) is still under consultation without a unanimous agreement from EU member states. Consequently, at this stage there is no legal commitment for the immediate harmonisation of national legislation, especially as there are serious objections at a European level with regards the final agreement.

Secondly, the study and elaboration of seven new taxes without the parallel consideration of compensatory measures calls into question the fiscal neutrality that the government proclaims, and therefore a debate at a parliamentary level cannot be conducted in the absence of a full picture of the government’s proposal.

Thirdly, the imposition of taxes given the shortcomings and gaps in public transport, the increase in landfill tax, the high cost of buying an electric car and the inadequate charging infrastructure are all inhibiting factors to fulfilling the objective of changing behaviour to more environmentally friendly actions. The imposition of taxes will more likely act as a punishment for society, which will be burdened with new economic burdens at a time of inflation and soaring price increases.

As things stand today, the imposition of the green tax in the way the government is working on its implementation will lead to greater costs for the economy and society than benefits.

We understand our contractual obligations to the EU in relation to the green transition, but achieving this strategic objective will need to be delivered through a more comprehensive set of measures and policies that emphasize more on establishing infrastructures for changing behaviour and relying less on the application of punitive measures.

In light of the above, I believe that the re-evaluation of the Recovery and Resilience Plan especially with regard to the issue of green taxation should be of serious concern to the government. I note that we are ready to make our own contribution with our views and proposals in this direction.

06.06.2024