Latvia proposes cutting fuel excise duty — LSM English

Latvia’s Saeima Budget and Finance (Taxation) Committee has decided to submit bills aimed at reducing fuel prices for parliamentary consideration. The initiatives provide for a temporary reduction in excise duty on diesel fuel and gasoline, as well as the abolition of the requirement for mandatory biofuel blending for certain types of diesel.

The committee’s decision was reported by LSM English. Committee chair Aiva Viksna said that high fuel prices affect virtually all residents and businesses in the country, while the excise duty reduction should ease price pressure and support business competitiveness amid a sharp increase in energy costs.

Temporary excise duty rates

Amendments to the law on limiting price increases for petroleum products provide for reducing the temporary excise duty rate on diesel fuel from 396 to 330 euros per 1,000 liters. This rate is to apply from October 1 until the end of the year. For unleaded gasoline, a temporary excise duty of 490 euros per 1,000 liters is proposed.

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Provided that the tax reduction is fully reflected in fuel prices, the retail price of diesel and gasoline could decrease by about eight euro cents per liter. The initiative also aims to reduce costs for businesses in transport, logistics, construction, manufacturing and other sectors.

Changes for farmers and the military

The bill provides that, until the end of the year, the impact of the lower excise duty on the state budget will be compensated by excess proceeds from the sale of confiscated assets acquired through criminal means. This decision is defined as a one-off measure. The committee will also ask the Saeima to consider the amendments to the law on limiting price increases for petroleum products under an urgent procedure and include them on the agenda of the September 24 sitting.

The committee also supported, at first reading, amendments to the Transport Energy Law. They provide for abolishing the mandatory blending of biofuel into marked diesel fuel for agriculture and fisheries. According to the bill’s authors, this could reduce the costs of farmers and fishing enterprises by 0.03–0.15 euros per liter. An exemption from the biofuel requirement is also proposed for separate diesel intended for the National Armed Forces and allied forces, in order to ensure its long-term storage and use in military equipment.