Solidarity tax will motivate fuel retailers to reduce prices as soon as possible - Valainis

RIGA - The solidarity tax will motivate fuel retailers to reduce the price as soon as possible, Economics Minister Viktors Valainis (Greens/Farmers) said in an interview with the Latvian Television on Tuesday.

He said that the current fuel prices showed that a solidarity tax was necessary.

Valainis said that fuel prices above EUR 1.8-1.9 per liter put a lot of pressure on the economy - a number of sectors will suffer from this situation, causing further price pressure on absolutely every activity, whether it is food prices or emergency medical services. "In real terms, the state budget will have to open its wallet if prices remain at this level," the minister said.

Valainis also noted that there is no consistency in fuel pricing - the price of fuel is instantly increased at petrol stations if the stock exchange price goes up, but the price remains the same when the stock exchange price goes down. "As soon as the stock exchange goes up, the price goes up instantly, and this happens in one-hour intervals," Valainis said.

He also pointed out that it has been almost a week since the excise duty on diesel was reduced, but the price of diesel at petrol stations has not changed. "Almost a week has passed, but the prices are where they were. I do not really see this excise cut reflected in fuel prices. There are various arguments, but these arguments are not valid in my opinion. So this excess profit tax would be exactly what would motivate the reduction as soon as possible," said Valainis.

Commenting on fuel retailers’ statement that the reduction in the excise tax on diesel fuel, which took effect on April 1, will be reflected at gas stations with a certain time lag, since the new rate will apply to fuel transported from excise warehouses to gas stations, Valainis noted that these arguments must work both ways, because when retailers have purchased fuel at a lower price, it is marked up within an hour if there is a rise on the exchange. "And what happens then? At that moment, their cheap fuel suddenly becomes more expensive," Valainis said.

As reported, on Tuesday, April 7, the government plans to further assess the Economics Ministry's proposal to apply a solidarity levy to fuel traders if their actual retail price exceeds the objectively calculated indicative retail price by more than 3 percent.

Economics Minister Viktors Valainis (Greens/Farmers) told LETA earlier that the first conclusions on the reduction of excise duty on diesel were very bad and showed that it was necessary to introduce a solidarity tax on fuel retailers.

The minister said that fuel prices are falling on world stock exchanges, but this is not happening in Latvia. "Fuel retailers should rethink their business policy, because at the moment words do not go together with deeds," Valainis said.