Gov’t promises to lower heating oil tax to 6 cents

The leveling of the consumption tax on heating oil with that of diesel will be abolished, Alternate Finance Minister Dimitris Mardas announced on Thursday. As a result, there will be a significant decline in the retail price of heating oil and the heating oil subsidy will cease.

Responding to a parliamentary question, Mardas said that heating oil will revert to its former tax status as of October, meaning that the special consumption tax will drop back to 6 euro cents per liter, while the tax on diesel will remain at 33 cents/lt. Given the significant decline in the retail price of heating oil, Mardas added that the subsidy will be abolished as there should be no reason for it.

The minister went on to appease deputies, saying, “We are not worried about tax evasion because a modern monitoring system covering the entire oil trading system from the fuel tanks to the most remote gas station will have been completed by the end of the year.”

Mardas noted that the tax change will increase budget revenues by some 350 million euros per year, according to a recent study drafted by the Center for Economic Planning and Research (KEPE), while public coffers have been deprived of annual revenues of 700 million euros. He added that the budget will also save 210 million euros from the heating oil subsidy, although he didn’t factor in the decline in consumption recorded in recent years due to the financial crisis.

However, before the government implements such a measure, or even tables it in Parliament, it will need to secure the approval of the country’s creditors.

The special consumption tax on heating oil and on diesel had been leveled at 8 percent of the diesel consumption tax, taking them both to 33 cents/lt, aimed at combating tax evasion and bolstering public revenues.