RIGA - Latvia might continue the practice of not adjusting the excise tax rate on fuel to the euro/lat exchange rate fluctuations if oil product prices remain at current levels, Prime Minister Aigars Kalvitis said last week. "We did not raise the excise tax on fuel at the beginning of the year, and it is apparent that the tax should not be raised at the present prices," he told reporters, explaining what the government could do to prevent a further rise in fuel prices, one of the key reasons for Latvia's high inflation.
Late last year the government agreed not to adjust the minimum excise tax rate on fuel to the lat/euro exchange fluctuations as should be done under the EU requirements because fuel prices seriously influence inflation, which is the highest in Europe.
At present the excise tax is 192 lats (273 euros) per 1,000 liters of non-lead gasoline and 164 lats per 1,000 liters of diesel. The minimum excise tax rate set for Latvia in the common European currency is 287 euros per 1,000 liters of gasoline and 245 euros per 1,000 liters of diesel fuel.
He said that Economy Minister Aigars Stokenbergs had suggested that the state could build up fuel reserves that businesses currently have to stock up, adding 0.02 lat (0.028 euro) to fuel price per liter.
In that case the government should consider organizing a national agency so that the state could issue loan guarantees for purchases of fuel and yet not affect the state budget, Kalvitis explained.
"Of course, we are not in a position to influence oil prices on the world market," the prime minister added. He stressed that the state did not have too many tools that could be used to bring down fuel prices.
