What happened
The Estonian government has decided not to cut fuel excise despite a proposal from the Chamber of Commerce and Industry to lower the diesel excise rate to the EU minimum. Climate Minister Erkki Keldo stated that reducing fuel excises to the EU minimum would result in a loss of approximately €210 million in revenue per year.
The Chamber of Commerce and Industry proposed a temporary reduction in diesel excise to help preserve businesses' competitiveness and curb inflation, citing soaring world diesel prices due to the Middle East conflict. However, Minister Keldo argued that the fuel price rise is driven by the world market, not taxes, and that excise duty cuts do not fully get passed on to prices at the pump.
The government is monitoring the situation, particularly in light of Latvia's recent excise duty cut, and is assessing the risk of cross-border trade. Prime Minister Kristen Michal stated that the government is taking the situation seriously and considering options to address potential price fluctuations and inflation.
