Cyprus, 05/06/2014

Prospects for Environmental Fiscal Reforms in Times of Economic Crisis

GBE co-organised a series of high-level EFR events in Cyprus from 5-6 June

Cyprus, a Eurozone country, is currently faced with not only a serious financial and fiscal crisis, but also with several environmental problems notably energy-related ones. Therefore, it is the right time for national authorities to consider moving to a rigorous environmental tax reform.

Together with Professor Theodoros Zachariadis who runs an EU Jean Monnet project entitled: "European Energy and Environmental Policies at a Crossroads" at the Cyprus University of Technology, GBE organised a number of high-level meetings to discuss opportunities for an enhanced EFR agenda for Cyprus within its GBE-project.

The meetings included a focussed and lively roundtable debate with representatives from Cypriot ministries, national agencies, civil society, the research community and academics. This roundtable focused on the necessary steps required to improve knowledge and enhance communication of green fiscal reform in order to increase the uptake of such measures in Cyprus. There is true potential for these methods to be very successful if correctly implemented. Amongst the issues touched upon were energy taxation, the differentiation of the annual road tax (particularly regarding the taxation of lorries), a possible air ticket tax (as second best for the legally difficult taxation of kerosene for commercial flights) and water taxation (partly implemented for compliance with the EU Water Framework Directive, but monitoring and enforcement of water metering raises certain challenges). Progress has been achieved in road transport by partly moving from a registration tax to an annual road tax based on CO2-emissions only, thus following guidance from the European Commission. Heating fuel taxation was considered as progressive since the rich are mainly benefitting from non-taxation. At least no company car taxation subsidies seem to exist. As an island, Cyprus has many similar challenges as small island development states (SIDS) for which the United Nations Office for Sustainable Development recently organised a workshop and EFR-training on Mauritius. Its website below contains relevant country information, a comparative study and findings, all of which can provide vital data in order to correctly legislate new EFR,.

Together with Hans Eichel, former German Minister of Finance between 1999 and 2005, GBE representatives met the Rector of the University of Cyprus and were informed about his initiatives and potential opportunities to promote environmental policies in the university i.e. via a more than 100% energy supply
from photovoltaics. After a further discussion with the German Ambassador and Professors from the University of Cyprus, some of whom also serve as advisors to the Government of Cyprus, Hans Eichel, Professor Theodoros Zachariadis and the GBE-team (Kai Schlegelmilch, Dr. Constanze Adolf) met the Minister of Finance, Mr. Harris Georgiades, to discuss opportunities for EFR. Here particularly, ways of how the principle and concrete elements of an EFR could help Cyprus, but also particularly energy related issues were discussed open-mindedly.

On Friday, 6 June, the European Commission Representation in Nicosia and the Cyprus University of Technology hosted a Green-Week Satellite event entitled "Environmental Tax Reform at Times of Economic Crisis". This international conference attracted more than 60 participants. Hans Eichel, Professor Sir Christopher Pissarides, the 2010 Economics Nobel Laureate and Chairman of the Council of National Economy of Cyprus, and Mr. Nico Heslop, Head of Energy and Climate Change Taxes at HM Treasury in the United Kingdom, Ms. Louise Dunne, Research Manager at University College Dublin in Ireland and GBE's Vice-President Kai Schlegelmilch were amongst a distinguished selection of speakers of this event which took place in the context of the pan-European "Green Week". Speakers from Cyprus offered their thoughts about the potential of such reforms in their country.

More information:
Conference Programme
German embassy article
European Commission: Environmental Tax Reform in Times of Economic Crisis: What Are the Prospects?
European Commission: PRESS RELEASE - Environmental Tax Reform at Times of Economic Crisis
StockWatch: H. Eichel: Green tax reforms offer possible exit to crisis (in Greek)
More information on FRE-Communicate


Harris Georgiades, Minister of Finance, Cyprus & Hans Eichel, German Minister of Finance 199-2005

Professor Sir Christopher Pissarides, the 2010 Economics Nobel Laureate and Chairman of the Council of National Economy of Cyprus

Roundtable discussion

Kai Schlegelmilch, GBE Vice-President