Direct Democracy leader and MEP Fidias Panayiotou has threatened to begin a hunger strike outside the Presidential Palace if VAT on electricity rises, while presenting a proposal he claims could cut prices by around 20%.
Speaking on Sigma’s Mesimeri kai Kati programme, Panayiotou criticised the government, arguing that high electricity prices generate greater VAT revenue for the state. He also addressed the cost of carbon emission allowances.
Challenge to Christodoulides continues
Panayiotou said he would not abandon the “challenge” he launched against President Nikos Christodoulides.
He said around 20 days had passed since the initiative began and pledged to continue putting daily pressure on the government.
“Mr Christodoulides, if we continue saying this every day and you do not act, I am not sure you will be re-elected,” he said.
Proposal for a 20% reduction
Panayiotou said reducing electricity prices does not require a “magic wand”, but specific political decisions.
“Today I have a proposal, a ‘magic wand’, as I call it, and I will explain how electricity prices can fall by 20%,” he said, responding to criticism of his initiative from the government, technical experts and political parties.
He argued that the state benefits financially from high electricity prices through the VAT imposed on bills.
According to Panayiotou, the higher the electricity bill, the more revenue the state receives. Referring to the possibility of the VAT rate returning from 5% to 19%, he said the state would collect €19 on a €100 bill.
Carbon allowance costs
The MEP also referred to the cost of carbon emission allowances, claiming that Cyprus pays approximately €200 million to €250 million annually because it generates electricity using fuels such as heavy fuel oil.
He said around half of that amount is returned to Cyprus but argued that the funds are not being invested sufficiently in the electricity grid and energy infrastructure.
“As Cypriot citizens, we must put pressure on the government so that there is a political cost and Mr Christodoulides understands that he will not be re-elected unless he reduces electricity prices by 20%,” he said.
Three proposed measures
Panayiotou presented three main measures that he linked to his goal of reducing electricity prices by approximately 20%.
The first measure is to maintain the reduced VAT rate of 5% on electricity. He claimed this could reduce electricity prices by around 12%.
He noted that other European countries, including Greece and Malta, also apply reduced VAT rates.
Panayiotou argued that maintaining the lower rate would affect not only electricity bills but the wider cost of living.
He said that if VAT returns to 19%, he will begin a hunger strike outside the Presidential Palace until it is reduced again to 5%.
“VAT on electricity must remain at 5%,” he said.
The second measure concerns what Panayiotou described as “double taxation” on carbon emissions.
He argued that the cost of emission allowances is included in the price of electricity, after which VAT is imposed on the total amount. He proposed that the government seek a derogation from the European Union to address the issue.
In his assessment, such a derogation could reduce electricity prices by a further 1%.
Until it is secured, he said the state could cover the additional cost instead of passing it on to consumers.
The third measure concerns revenue returned to Cyprus from emission allowances.
Panayiotou said that of the approximately €120 million returned to the government, based on his calculations, half could be invested directly in the electricity grid, energy storage infrastructure and batteries.
He proposed that the remaining €50 million to €60 million be returned to consumers through discounts on electricity bills, with particular support for vulnerable groups.
According to Panayiotou, this measure could produce a further reduction of between 5% and 6%.
