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Green Taxes Are Coming To Cyprus—And Everyone Will Feel The Cost

Cyprus is embracing the green transition with a new wave of environmental taxes, aiming to slash greenhouse gas emissions by 32% by 2030. While the shift is considered necessary and legitimate, it’s also set to hit the pockets of households and businesses nationwide.

Experts, officials, and economists agree: green taxes are critical to bridging the cost gap between fossil fuels and cleaner alternatives. But concerns are mounting over how these levies will affect competitiveness, and whether consumers can absorb the shock.

The Carbon Price Surge: What’s Coming

The most impactful measure is a carbon tax on petrol and diesel, expected to initially raise pump prices by 5.95 cents per liter, increasing to 10 cents by 2026. That’s just the start.

By 2027, the EU’s new Emissions Trading System (ETS2) will come into play, potentially pushing fuel costs up by another 18 cents per liter.

Add to this:

  • A new water tax of €0.01 per cubic meter has already been approved by the Council of Ministers.
  • A waste fee tied to the “pay-as-you-throw” scheme.
  • A planned overnight hotel fee has now been postponed to 2026.

These taxes, part of Cyprus’s Recovery and Resilience Plan, were originally due by November 2023, but have been delayed until May 2025, according to Finance Minister Makis Keravnos.

However, carbon tax implementation is now expected this summer, pending the finalization of compensatory measures, said Andreas Zachariades, the finance ministry’s permanent secretary.

What Will It Cost—And Who Pays The Most

According to a new University of Cyprus Centre for Economic Research report, green taxes are set to dent household well-being, particularly for lower-income families.

Key findings:

  • Fuel and water taxes will increase household spending by 0.37% on average.
    Lower-income households will feel a disproportionate impact.
  • The state stands to gain €54 million annually from fuel taxes—€33 million from households and €19 million from businesses.
    The overnight hotel fee could bring in another €34 million per year.

The Government’s Pledge: Balance Pain With Support

Despite the burden, the finance ministry has committed to a fiscally neutral policy—meaning all revenue from green taxes will be offset by equivalent support measures.

Planned compensations include:

  • Subsidies for vulnerable groups.
  • Incentives to replace vehicles with greener models.
  • Support schemes for businesses adapting to sustainable practices.

By 2026, total revenue from green taxes is expected to reach €70 million, matched by an equal value in compensatory measures, according to Zachariades.

Supporters Say It’s Necessary. Critics Want A Delay.

Economist Tasos Yiasemides said the cost of transformation is high, but stressed the importance of long-term sustainability and the government’s plan to cushion the blow: “The state’s commitment to a fiscally neutral policy and the adoption of support measures will help protect consumers and businesses.”

However, the Cyprus Consumers’ Association remains unconvinced. President Marios Drousiotis called for delaying implementation until economic conditions allow.

Even a 1 cent fuel increase, he warned, would cost consumers €9 million a year. While he acknowledged the ripple effect on other goods, he noted that price increases may not be prohibitive—yet.

The Bottom Line

Cyprus’s climate goals are ambitious—and green taxes are part of the cost of getting there. But balancing environmental responsibility with economic fairness remains a delicate act.

As the green transition gains momentum, the real test will be whether the government can deliver on its promise: a fairer, cleaner future that doesn’t leave the most vulnerable behind.

Strained Household Finances: Eurostat Data Reveals Persistent Payment Delays Across Europe and in Cyprus

Improved Financial Resilience Amid Ongoing Strains

Over the past decade, Cypriot households have significantly increased their ability to manage debts—not only bank loans but also rent and utility bills. However, recent Eurostat data indicates that Cyprus continues to lag behind the European average when it comes to covering financial obligations on time.

Household Coping Strategies and the Limits of Payment Flexibility

While many families are managing their fixed expenses with relative ease, one in three Cypriots struggles to cover unexpected costs. This delicate balancing act highlights how routine payments such as mortgage installments, rent, and utility bills are met, but precariously so, with little room for unplanned financial shocks.

Breaking Down Payment Delays Across the European Union

Eurostat reports that nearly 9.2% of the EU population experienced delays with their housing loans, rent, utility bills, or installment payments in 2024. The situation is more acute among vulnerable groups: 17.2% of individuals in single-parent households with dependent children and 16.6% in households with two adults managing three or more dependents faced payment delays. In every EU nation, single-parent households exhibited higher delay rates compared to the overall population.

Cyprus in the Crosshairs: High Rates of Financial Delays

Although Cyprus recorded a notable 19.1 percentage point improvement from 2015 to 2024 in delays related to mortgages, rent, and utility bills, the island nation still ranks among the top five countries with the highest delay rates. As of 2024, 12.5% of the Cypriot population had outstanding housing loans or rent and overdue utility bills. In contrast, Greece tops the list with 42.8%, followed by Bulgaria (18.7%), Romania (15.3%), Spain (14.2%), and other EU members. Notably, 19 out of 27 EU countries reported delay rates below 10%, with Czech Republic (3.4%) and Netherlands (3.9%) leading the pack.

Selective Improvements and Emerging Concerns

Between 2015 and 2024, the overall EU population saw a 2.6 percentage point decline in payment delays. Despite this, certain countries experienced increases: Luxembourg (+3.3 percentage points), Spain (+2.5 percentage points), and Germany (+2.0 percentage points) saw a rise in payment delays, reflecting underlying economic pressures that continue to challenge financial stability.

Economic Insecurity and the Unprepared for Emergencies

Another critical indicator explored by Eurostat is the prevalence of economic insecurity—the proportion of the population unable to handle unexpected financial expenses. In 2024, 30% of the EU population reported being unable to cover unforeseen costs, a modest improvement of 1.2 percentage points from 2023 and a significant 7.4 percentage point drop compared to a decade ago. In Cyprus, while 34.8% still report difficulty handling emergencies, this marks a drastic improvement from 2015, when the figure stood at 60.5%.

A Broader EU Perspective

Importantly, no EU country in 2024 had more than half of its population facing economic insecurity—a notable improvement from 2015, when over 50% of the population in nine countries reported such challenges. These figures underscore both progress and persistent vulnerabilities within European households, urging policymakers to consider targeted measures for enhancing financial resilience.

For further insights and detailed analysis, refer to the original reports on Philenews and Housing Loans.

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