**Cyprus Extends Fuel Tax Cut Amid Rising Oil Prices**
In response to escalating oil prices, the Cypriot government has announced an extension of the fuel consumption tax reduction for an additional one to two months. Finance Minister Makis Keravnos made the announcement on Tuesday, stating that the extension will maintain the current tax relief at the pump beyond its scheduled expiry date of September 17.
The proposed extension is set to take effect on September 18, pending approval from both the cabinet and parliament. Minister Keravnos emphasized that the existing reduction, which currently cuts excise duty by 8.33 cents per litre, will remain unchanged. This reduction has adjusted petrol excise duty from €0.429 to €0.359 per litre, while diesel rates have decreased from €0.40 to €0.33 per litre.
Keravnos noted that the government would reassess the situation after the extension period, taking into account the fluctuating dynamics of energy markets and the geopolitical landscape, particularly developments in the Middle East that could impact fuel prices. “The situation is changing daily,” he remarked, highlighting the uncertainty surrounding future fuel costs.
The Finance Ministry confirmed that the bill for the extension has already received approval from Keravnos and will be submitted to the cabinet before being forwarded to the House of Representatives ahead of the impending deadline.
The decision to extend the tax cut comes amid a backdrop of rising international oil prices, which have surged above $90 a barrel, compared to approximately $80 a week prior. This increase has prompted concerns about the potential impact on local fuel prices. Christodoulos Christodoulou, a representative of the petrol station owners’ association, indicated that fuel prices had already seen slight increases over the past two weeks. However, he noted that it was premature to fully gauge the effect of the higher international prices, as local fuel companies had yet to receive shipments purchased at these elevated rates.
Minister Keravnos pointed out that Cyprus has reduced fuel tax to the maximum level allowed under European Union regulations. He also mentioned that, aside from Bulgaria, Cyprus currently boasts the lowest petrol prices in the EU, a situation he attributes in part to the government's tax policy on fuel.
The existing tax reduction has reportedly saved consumers approximately €15.5 million, according to previous government estimates. Keravnos reiterated the government's commitment to providing relief to consumers amid ongoing negative developments in the energy sector, aligning with the European Commission's strategy for energy support, which advocates for targeted and limited interventions.
As the situation evolves, the Cypriot government remains vigilant in monitoring international oil market trends and their implications for local consumers, ensuring that necessary measures are in place to mitigate the impact of rising fuel costs.