Finance minister: Estonia will not slash excise duties on motor fuels
Finance Minister Jürgen Ligi said the government does not plan to lower fuel excise duties as a very generous tax relief has already been granted by canceling previously planned excise increases.
According to Jürgen Ligi, the government does not plan to lower fuel excise duties or impose a price cap, as Poland has done, in order to offset rising fuel costs for consumers.
"It is definitely the wrong policy. It runs counter to long-term policies as well as economic logic. When there are supply difficulties, you should not stimulate demand, but rather stimulate supply — and that is what we are doing," Ligi said.
"We have already implemented a very generous tax relief, made our decisions and will not start copying such measures," the minister added.
Alan Vaht, a member of the management board of fuel retailer Terminal, wrote on social media last week that Estonia should consider temporarily lowering fuel excise duties, as higher fuel prices bring in €10–11 million to the state budget through value-added tax.
Ligi said, however, that this is a miscalculation.
"It is very naive, but I have also explained to the Estonian government that we will not take this path — we cannot. We cannot single out one tax to raise or lower simply because prices are rising, as the economy is actually contracting at the same time," the minister explained.
Ligi declined to specify how much additional revenue the state might gain from higher fuel prices and dismissed Vaht's claims.
"Let's not have interest groups making forecasts. 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," the minister said.
While Latvia is discussing a fuel price cap and other nearby countries are considering lowering excise duties, Ligi said such moves are foolish.
"Let others make foolish decisions. I will argue against them and say what the correct or better policy is," Ligi said.
The Ministry of Finance will publish its economic forecast on Thursday, in which, according to the minister, the state budget deficit will be larger than previously projected.
"It's unfortunate that forecasts are locked in before Trump says something, or Iran and Putin speak, or Ukrainian drones keep flying. NATO suppliers are in a state of crisis," the minister said.
--
Editor: Marcus Turovski, Märten Hallismaa
