Excise tax cut on fuel should be considered - economics minister

RIGA - A reduction of excise tax on fuel should be considered, Economics Minister Ilze Indriksone (National Alliance) told LETA. 

"Already in March, during the first significant price increase, we proposed cutting the excise tax rate to the minimum set by the European Union (EU). This would have significantly reduced the price if it did not rise further, or would slow down the rise if the price kept climbing. We have already tabled this proposal and will discuss it once more, also to hear other coalition partners' arguments against it," Indriksone said. 

The minister said that cutting the tax rate would be important because with fuel becoming more and more expensive, the price hikes are affecting all other areas - not just households' budgets, but also the competitiveness of businesses.

"Many European countries have briefly reduced their excise tax rates. There are also other tools, but in my view, an excise tax cut would ensure the fastest effect without leaving a long-term impact, because later, the tax rate can be upped again. The argument that this will not reduce the price is groundless, because at a time when prices are climbing anyway, the measure would at least lessen this increase. Each measure that improves our competitiveness is worth taking," the minister said. 

As reported, on June 14 the government decided that addition of biofuels to gasoline and diesel will no longer be mandatory from July 1 until end-2023 in order to keep price hikes in check. 

During this period, addition of biofuels to gasoline and diesel will be voluntary, that is, fuel retailers or wholesalers will decide themselves whether or not to add biofuels to gasoline and diesel.

However, the parliament on June 16 rejected opposition lawmakers' proposal to cut excise tax on fuel. 

According to the Finance Ministry's estimates, the state budget would lose EUR 94.2 million worth of taxes (EUR 114 million with VAT included) if the excise on fuel was cut to the minimum permitted by the European Commission.