On Thursday, the Saeima adopted the amendments to the Law on Limiting the Increase in the Prices of Oil Products, which envisages maintaining the reduced excise tax rate for diesel fuel until the end of this year.
Until now, the reduced excise duty rate was planned to be applied only until June 30, however, the coalition parties forming the government agreed to extend this support measure until the end of the year.
In accordance with the law that entered into force on April 1 of this year, excise tax diesel fueli was temporarily reduced from 467 euros to 396 euros per 1000 liters in order to reduce the impact of the increase in fuel prices on the economy and the population. On the other hand, the rate for labeled diesel fuel in agriculture is set at 21 euros per 1000 liters.
Harijs Rokpelnis, head of the Saeima faction of the Union of Greens and Farmers, previously emphasized that the original regulation was adopted as a reaction to the tension in the Middle East and related uncertainty in the energy markets. He pointed out that although there are some signs of stabilization in the situation, there are no guarantees of long-term stability and fuel prices still remain higher than before the start of the conflict.
The parliamentary secretary of the Ministry of Economy, Jurģis Miezainis, has also emphasized that the instability in the energy resource markets remains, and maintaining the reduced excise duty helps to ensure greater predictability and stability.
At the same time, the Ministry of Finance warned in advance about the possible negative impact on the state budget. The representative of the Ministry, Ilmārs Šnņucins, stated that at the current level of fuel prices – below two euros per liter – the extension of the excise duty reduction could result in a decrease of about 2.4 million euros in revenue per month. In the opinion of the FM, if necessary, compensatory mechanisms should be assessed, for example using contingency funds.
During the discussions in the Saeima, questions were also asked about the extension period – why is it set until the end of the year, and not for a shorter period. Rokpelnis explained that a longer term allows saving administrative resources and can help to slow down inflation, while leaving the possibility to review the situation if fuel prices drop significantly.
The adopted amendments also provide for technical changes – if the trader has diesel with a reduced excise duty rate in his warehouse on December 31, 2026, a special excise inventory will not be required from January 1, 2027.
It has already been reported that the average price of diesel fuel in Latvia this year reached its highest level in the week from April 6 to 12, when it was 2.12 euros per liter. On the other hand, the historically highest prices for both diesel fuel and brand 95 gasoline were fixed in June 2022.
