Finance Minister Keit Pentus-Rosimannus will introduce a bill to the government, which proposes to extend the current excise duty rates by one year and to postpone the excise duty increase planned for 2023.
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The proposal concerns diesel fuel, heating oils, natural gas as fuel and motor fuel, liquid gas as fuel and electricity. Also, according to the proposal, the taxation of special-purpose diesel fuel used for the agricultural sector will be extended by one year at the minimum level allowed by the European Union.
According to the draft submitted by the Minister of Finance, the previously lowered excise duty rates will be valid for one more year, until April 30, 2024. This will be followed by a gradual restoration of excise duty rates to pre-crisis levels over four years (2024-2027).
"Restoring excise duties to the pre-crisis level would give the wrong impetus and message in the current situation of rising prices, this must be avoided," said Minister of Finance Keit Pentus-Rosimannus.
"It is also important for farmers to get assurance as early as possible that the special purpose diesel they use is taxed at the minimum level until the spring of 2024."
The changes concern the Alcohol, Tobacco, Fuel and Electricity Excise Act and the Act amending it, which will enter into force on January 1, 2023.
With the amendment to the Alcohol, Tobacco, Fuel and Electricity Excise Act, excise rates for electricity and certain fuels were initially lowered for a period of two years from May 1, 2020.
The purpose of lowering the rates was to alleviate the effects of the crisis caused by the spread of the COVID-19 virus on fuel consumers and to facilitate economic coping.
At the end of 2021, a law was passed, which provided for a four-year gradual restoration of fuel and electricity excise duties to the pre-crisis level from May 1, 2023.
The changed security situation in Europe has led to a sharp increase in the price of energy carriers. This has brought the biggest price increase to Estonia in recent decades. In the current situation, it is important that the state supports both households and business consumers.
Therefore, it is justified to postpone the excise duty increases that were supposed to take place on May 1, 2023-2026 by one year and to achieve the pre-crisis level of excise duty rates by 2027.
In addition, the agricultural sector and oil shale mines can use special purpose diesel fuel at the level of the European Union's minimum rate, which is 21 euros per 1000 liters, until April 30, 2024.
The measure supports the competitiveness of the mentioned sectors. From May 1, 2024, the excise duty rate for special-purpose diesel fuel for the agricultural sector will rise to 107 euros per 1,000 liters, and oil shale mines can only use diesel fuel taxed at the standard rate. ■