Nicosia Municipality has approved green taxation under Hotel Tax and the revenues collected will compensate all the Hotels in its region with free Energy Audits
Although many local authorities in Cyprus have committed the Covenant of Mayors movement for implementing sustainable energy and climate actions, limited competences and authorization in their territory, withhold effective, non time-consuming solutions. Consequently, local authorities in Cyprus were unable to introduce a new green taxation category and further support the sustainable energy and climate action plans in place.
Αn innovative three-way approach was identified and promoted in Nicosia Municipality for a successful application of green taxation. The first step was the analysis of the current legislative framework and how the green fees can be adapted inside a taxation category without any Law revision. The second step was the selection of a suitable taxation category for the municipality, where the green fiscal policies will be approved and applied in their territory. Finally, the third step was the establishment of a green -revolving fund from which the revenues of the green taxation will finance sustainable actions supporting RES and energy efficiency measures.
The results were impressive given the fact that many times in the past, Cypriot local authorities have been trying to apply green taxation without any success. Nicosia Municipality has approved green taxation under Hotel Accommodation Tax and the revenues collected will compensate all the Hotels in its region, with free Energy Audits as well as the funding of two awareness events each year.
The 3 year actions for the application of green fiscal policies in Nicosia Municipality was co-financed by the European Regional Development fund and from Cyprus Energy Agency.
Evidence of success
Nicosia’s Municipal Council and Mayor officially approved on 10th January 2019 the green taxation and the increase of 5% in the hotel accommodation tax per room per night, for the years 2019-2021.
According to the design of this fiscal policy, the €21,000.00 that will be raised through the increased taxation for the first 3 years, beginning in 2019, will be ring-fenced in a green mechanism-fund and used to provide free energy audits to hotels in the Nicosia district.
Potential for learning or transfer
Many European countries, among them Cyprus, have applied fiscal policies promoting energy efficiency, RES, reduction of wastes etc., towards a greener economy and a higher quality of life. However, when the green fiscal policies are shifted to local level for implementation, the successful application is surrounded with many barriers.
This innovative approach that was identified and promoted in Nicosia Municipality can be easily replicated to the different EU cities with limited competences and authorization in their territory.
Green taxation is one important tool towards local sustainability and the first step for the development of a revolving fund, financing sustainable actions (SECAPs, SUMPs).