Latvia delays decision on extending lower diesel excise duty

The Latvian government has delayed a decision on extending the reduced excise tax rate for diesel fuel by one week. The Ministry of Economics (EM) proposed the extension, citing persistently tense market conditions and diesel prices close to those seen in mid-March. The ministry believes a three-month extension of the reduced rate would provide necessary stability for the transport and logistics sector, farmers, and consumers who are sensitive to fuel price fluctuations.

The current excise tax reduction for diesel fuel was introduced in March as a targeted support measure in response to soaring global energy prices. The law limits the excise tax on diesel from 467 euros to 396 euros per 1,000 liters. This reduced rate is currently in effect until June 30, 2026. The EM estimates that maintaining the reduced rate would lower fuel costs by approximately 8.6 cents per liter for drivers, the transport industry, logistics companies, and other businesses.

For marked diesel fuel used in agriculture, a particularly reduced excise rate of 21 euros per 1,000 liters is in place, lowering the price by about 5.9 cents per liter. The Ministry of Economics considers this solution fiscally neutral, as the increase in value-added tax revenue from higher fuel prices would compensate for the excise tax reduction. The ministry continues to monitor international energy markets and analyze potential scenarios to offer further solutions for economic resilience if needed.

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The preservation of the current excise reduction for a couple more months would provide the necessary stability for the transport and logistics sector, farmers, and every resident who experiences fuel price fluctuations in their daily lives.