The heating fuel tax has been reduced by 6.39 cents per litre, including VAT, after the House of Representatives approved legislation on Thursday. The measure takes effect on 23 October, bringing forward the original start date of 1 November, and will remain in force until 30 April 2027.
The reduction aims to ease the financial burden on households ahead of winter, as international market uncertainty and rising seasonal demand put pressure on heating costs.
Heating fuel tax cut to cost €5.2 million
The legislation temporarily reduces excise duty on specific categories of heating fuel covered by classes 7, 9, 11 and 13 of the First Schedule of the Excise Duties Law.
The tax reduction amounts to 5.373 cents per litre before VAT, or 6.39 cents per litre including VAT. The estimated cost to public finances is approximately €5.2 million.
According to the House Finance Committee, prolonged uncertainty in international markets, combined with an expected increase in energy demand during the winter months, is creating additional pressure on household heating bills.
The committee also referred to European Commission guidance submitted to the Eurogroup on 18 March, which said governments could consider short-term support for households. Such measures should be targeted, temporary, financially costed and designed to avoid encouraging unnecessary fuel consumption.
MPs call for further measures to tackle high costs
During Thursday’s parliamentary debate, MPs called for additional measures to ease the cost-of-living burden. Others stressed the need to protect public finances amid continued geopolitical uncertainty.
AKEL MP Andreas Pasiourtidis welcomed the government’s decision, describing the tax reduction as necessary to support households. He reiterated the party’s call to discuss a derogation from EU rules and the abolition of double taxation, while referring to other proposals put forward by AKEL.
ALMA leader Odysseas Michaelides questioned the government’s approach to fuel taxation. He said heating fuel prices had risen significantly compared with March and argued that the government should seek further exemptions from the European Commission to secure a more substantial reduction.
Michaelides cited Sweden’s reported reduction of 14 cents per litre, contrasting it with what he described as the Cypriot government’s more limited approach.
Parties divided over economic support
DIKO MP Chrysis Pantelides pointed to tax reductions introduced during the current administration, including measures affecting heating and motor fuels, as well as zero VAT on selected products and electricity. He argued that Cyprus and other EU countries were facing an extended period of crises rather than normal economic conditions.
ELAM MP Marios Pelekanos welcomed the government’s efforts to secure further reductions but said additional support for vulnerable groups should be considered when public finances allow.
DISY MP Savia Orfanidou described the measure as a step in the right direction but argued that it did not fully address inflation and the rising cost of living. She called for a more comprehensive approach, including structural measures and the reallocation of resources towards the groups most affected.
AKEL general secretary Stefanos Stefanou argued that comparisons with fuel prices in other European countries should take account of Cyprus’ dependence on private vehicles. He highlighted limited public transport options and the costs families face when travelling to work, schools and extracurricular activities.
Stefanou called for more resources to support households, including through the redistribution of increased state revenues and measures addressing businesses benefiting from high prices, dominant market positions and oligopolies.
MPs call for permanent solutions
Direct Democracy MP Giannis Laouris called for permanent solutions, arguing that energy should be treated as a basic necessity rather than a source of taxation. He said his party would soon submit five legislative proposals aimed at addressing the issue.
DIKO MP Adamos Aspris defended the government’s approach, saying the state was responding to the global crisis within its financial capabilities. He questioned whether using up budget surpluses or eliminating taxes would be sustainable in the longer term.
DIKO MP Christiana Erotokritou stressed that the reduction would take effect at midnight on 23 October rather than on 1 November, as originally planned.
She said the government was doing what it could within the limits of public finances and noted that a response was still expected from the European Commission regarding a possible further reduction.
Erotokritou also defended the government’s position on VAT, warning that eliminating it entirely could ultimately leave taxpayers facing the bill.
Also read: MPs call for urgent measures to address blood shortages in Cyprus
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