The Latvian Parliament today unanimously adopted amendments to the law on excise tax for oil products, setting the tax on diesel fuel at 100 lats per 1,000 litres, a 25% reduction. The tax on petrol was not reduced.
According to the measure's sponsors, the changes are necessary because, due to fluctuations in the euro, the current excise tax rate in Latvia has reached the minimum rate for excise tax set by the European Union. Latvian prices for diesel fuel and petrol are the highest in the Baltic, and the competitiveness of the national economy is being hampered.
The price for diesel fuel will now be equal to that in other Baltic countries and this will stimulate transit carriers to buy more fuel in Latvia. Other branches of the national economy would be boosted because the cost for diesel fuel makes up a considerable part of expenditure. Exports, employment and foreign investment should all benefit.
It is also hoped that the amount of fuel smuggling will be sharply cut by the tax reduction. The new rate of duty is already in effect.
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