Lithuania says EU urges caution on broad fuel tax cut

VILNIUS - Lithuania’s deputy finance minister Darius Sadeckas said on Wednesday that the European Commission is urging European Union countries to avoid broad price-cutting measures as fuel prices rise due to the conflict in the Middle East, while the ministry has proposed a temporary cut in diesel excise duties.

"We are receiving signals from the European Commission. All European countries are discussing these measures. The Commission points out the signal we send when measures attempt to make fossil fuels cheaper. Are these appropriate steps if our goal is to transition to renewable energy sources?" Sadeckas said on Wednesday.

He emphasised that cutting fuel taxes is one of the least targeted measures, as it benefits all residents, including the wealthiest. He noted that the proposed excise reduction is intended only to return a portion of the windfall revenue the state receives from surging prices.

"The European Commission is urging countries not to take large-scale tax measures that lack a specific target and are not precise, as they are used by everyone regardless of income. The government's goal is simply to return the additional VAT revenue we collect through the excise duty. The impact on the budget would be neutral and does not require a budget review," Sadeckas explained.

He added that while more extensive measures might be necessary if the conflict persists, such a move would require a formal revision of this year's budget.

"If we were to talk about larger figures, we would need to return to a budget review. This is one possible path if the crisis lasts longer and the impact is greater. That may be necessary," Sadeckas said.