Households need to brace themselves for additional financial burdens as the green taxation initiative is set to increase fuel prices by 5 cents per liter. However, this is not the only additional cost that will be imposed on fuel prices. Starting April 1st, the reduced fuel consumption tax measure will be abolished, reintroducing an additional cost of 8.3 cents per liter.

Although the exact date for the implementation of the new green tax on fuels has not been announced, sources from Brief suggest that it is expected to be imposed before summer.

Consequently, due to the abolition of the reduced fuel consumption tax, and with no intention from the government to extend it, citizens will face a total increase of 13 cents per liter in fuel prices (5 cents from the green tax and 8.3 cents from the consumption tax).

It should be emphasized that, in response to these increases, the government intends to implement compensatory measures to mitigate the impact on households and businesses.

However, the increases do not stop here. As presented during the 2nd Meeting of Tax Transformation, this green fee is expected to rise in 2025 and 2026. Specifically, data from the University of Cyprus' Economics Research Centre indicate that the carbon tax will increase to 7 cents in 2025 and reach 10 cents per liter in 2026.

It should also be noted that there will be a 1 cent increase in water prices and a €2.50 green overnight stay fee (tax per room).

The Minister of Finance, Makis Keravnos, stated that there will be no severe threats to households and businesses, noting that the changes will be fiscally neutral due to the planned compensatory measures.

According to the models analyzed, the most vulnerable households will face an annual cost of €48, although this is not definitive. Research by the University of Cyprus suggests that the average annual burden per citizen from the reform will be €121.

The same models presented to the Ministry of Finance forecast state revenues for 2024:

• €52 million from Carbon Tax on Fuel Consumption: €19 million from businesses and €33 million from households. These revenues will be returned to businesses in the form of subsidies and other measures for industries heavily dependent on fuels. Vulnerable households will receive compensation (€100) and other measures like free public transport and grants for purchasing green vehicles.

• €13 million from Carbon Tax on Production Fuels in businesses: These will be returned in the form of green subsidies for transitioning to clean energy.

• €34 million from the Green Overnight Stay Fee: This will be collected from hotels and other accommodations and returned as enhancements for environmental and energy infrastructure.