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VAT on Electricity Bill Surcharge for Mari Explosion 'Illegal' - MP

mari explosion taxesCharging VAT on the temporary surcharge of 7 percent imposed by the Electricity Authority after the explosion at Mari naval base is illegal and must be investigated, said EVROKO MP Demetris Syllouris.

The surcharge, amounting to exactly 6.96 percent of each total electricity bill, is charged before VAT, which has now risen to 17 percent. Although approved by the Cyprus Energy Regulatory Authority (CERA) in order to help cover the costs incurred to buy generators after the explosion, it may be in breach of consumer laws, according to the MP. It is not allowed to charge VAT on a service or product that has never existed in the first place, according to Consumer Union president Loucas Aristodemou.

Many consumers are not aware that there is a temporary surcharge adding to their overall electricity bill, let alone that they have to pay full VAT on it, in effect, sending an additional 1 percent to the VAT office.

After the devastating explosion at Evangelos Florakis naval base in Mari, the island's main power plant was critically damaged, and the EAC had to import generators and heavy oil fuel on an emergency basis. The surcharge started at the end of September 2011 and continues for 10 months.

The price rise was opposed by political parties, which describe it as a socially unjust decision and unfair burden on the population.

Power cuts of around two hours per day lasted for over a month after the blast on July 11th, and there is an estimated 700 million euros in damage to the plant at Vassiliko. Insurance payments are expected to cover part of the costs of rebuilding the plant, but the European Commission recently signalled they would turn down Cyprus' request for money from the Solidarity Fund because the explosion damage was not due to a natural disaster.

To learn more about EU consumer protection rules on energy billing practices, click here

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