Estonian PM Michal says fuel excise duties in neighboring countries will be monitored — ERR News

Estonian Prime Minister Kristen Michal said the government will monitor neighboring countries' decisions on fuel excise duties, but cannot provide additional tax relief due to the need to reduce the budget deficit. This was reported by ERR News.

Calls to reduce diesel excise duty

Last week, organizations representing Estonia's transport, logistics and fuel sectors called on the government to immediately reduce the excise duty on diesel fuel to the minimum level set in the EU. In their assessment, the significant difference in diesel prices between Estonia and Latvia could result in up to one-third of Estonia's diesel excise revenue shifting to other countries.

Finance Minister Jürgen Ligi refused to lower the tax. Michal noted that it is still difficult to assess the consequences of Latvia's tax reduction, as fuel in Latvia and Lithuania is more expensive than in Estonia. According to him, if half of the tax cut is reflected in retail prices, they could approach the Estonian level.

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Budget constraints

The prime minister recalled that the government had already canceled the planned excise duty increase. At the same time, he stressed that any further excise duty relief could only come at the expense of other budget expenditures. Michal also mentioned the reduction of fuel excise duty in Sweden and the Swedish government's request to the European Commission for an exemption.

According to the head of government, events in the Strait of Hormuz caused prices to rise in Europe, affecting the cost of fuel, gas and public transport and potentially impacting agriculture. He linked the limited scope for tax relief to the need to reduce the budget deficit and debt burden.

Payroll expenditures

Michal also said that next year's budget provides for a 3% increase in the payroll fund for teachers, cultural workers, rescuers and police officers. He called this figure the maximum possible given the current state of public finances. The prime minister criticized Ligi's remarks that low-paid rescuers have other job options, noting that police officers and rescuers perform essential work.