The government will accept any decision of the House lowering consumer tax on fuel, but continues to believe that reducing the withholding tax on interest would be a better course of action, Finance Minister Harris Georgiades told CyBC radio on Saturday.
He said that the government had proposed lowering the withholding tax on interest that is imposed only on Cypriot depositors, as this would also encourage savings. He noted that consumer tax on fuel is not high by EU standards.
Ruling Disy and opposition Diko have instead jointly proposed a reduction on the consumer tax on fuel.
Georgiades said that the disagreement with Disy, the government’s main backer, was “pleasant” — given that public finances allowed a choice — and not unusual.
He disputed that there were more drivers than Cypriot depositors, adding that the government would not abandon its plan to lower the withholding tax and would revisit its proposal in the new year.
Disy and Diko are proposing cutting the consumer tax on petrol, diesel and heating fuel by 5 cent a litre, with the shortfall in the 2019 budget to be made up by scrapping the government’s planned reduction in the withholding tax on deposits.