Estonian Finance Minister Jürgen Ligi has informed that the government does not plan to reduce excise duty on fuel, because by abandoning the previously planned increase in excise duty, significant relief has already been provided, writes ERR News.
As Ligi explained, the government does not plan to lower the excise duty rate or introduce a cap on fuel prices, as Poland has done. He said that this would be the wrong approach, and contradicts long-term policy and economic logic: “When there are supply difficulties, you should not stimulate demand, but rather stimulate supply — and that is what we are doing.”
The minister added that generous tax breaks have already been introduced, and the decision has been made – the excise duty will not be reduced.
Alan Vaht, a board member of the fuel retailer Terminal, wrote on social media last week that Estonia should consider a temporary reduction in excise duty, as higher fuel prices would already bring an additional 10-11 million euros to the state budget in value-added tax. However, Ligi stressed that this is not a correct calculation, and he has explained to the government that the excise duty reduction route will not be followed. The minister refused to disclose how much the state budget could gain from higher fuel prices, and rejected Vaht’s assumptions. Ligi urged not to rely on the forecasts of interest groups:
“It is quite amusing when traders promise to lower prices.
The whole logic is that if reductions do happen, they are temporary, partial and can never be controlled.”
Although price caps are being considered in Latvia and other nearby countries are lowering excise duty, Ligi believes that such actions are foolish. He indicated that he will let others make foolish decisions and is ready to argue and tell what is the right or at least better approach.
The Estonian Ministry of Finance will publish economic forecasts on the 2nd of April, and the minister indicated that the state budget deficit will be larger than previously planned.
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