The Minister of Finance proposes to postpone the increase in excise duties scheduled for the spring for a year | Economy

The proposal concerns diesel, fuel oil used for heating, natural gas, both as domestic fuel and fuel, and liquefied natural gas (LNG).

In addition, the bill would extend the taxation of special purpose diesel fuel for the agricultural sector for one year.

The taxation of this special purpose diesel, also known as derv, is imposed at the minimum level allowed by EU rules.

The draft submitted by the Minister of Finance stipulates that the excise rates as previously reduced will be valid for an additional year, until April 30, 2024. This will be followed by a gradual restoration of the excise rates to the levels of before the crisis, over a period of four years (2024-2027).

Pentus-Rosimannus said, “Restoring excise duties to pre-crisis levels would bring the wrong impulse and the wrong message in the current inflationary situation, and this should be avoided.”

This decision will also bring more security to the agricultural sector, the minister added.

“It is also important that farmers ensure as soon as possible that the special purpose diesel they use will be taxed at the minimum level until spring 2024.”

The changes concern the Alcohol, Tobacco, Fuel and Electricity Excise Act and the bill amending it, which is due to come into force on January 1, 2023.

With the amendment of the Alcohol, Tobacco, Fuel and Electricity Excise Act, excise rates on electricity and certain fuels were initially lowered for a period of two years from 1 May 2020, in response to the arrival of the pandemic and its economic effects.

At the end of 2021, a law was passed which provided for a four-year gradual restoration of excise duties on fuel and electricity, to pre-crisis levels, starting from May 1, 2023.

The evolution of the security situation in Europe has led to a sharp increase in the price of energy carriers. This has resulted in the biggest price increase in Estonia in recent decades. In the current situation, according to the Ministry of Finance, it is important for the State to support both households and consuming companies. This justifies postponing the excise duty increases that were due to take place on May 1, 2023-2026 for a year and reaching the pre-crisis level of excise rates by 2027.

In addition, the agricultural sector and oil shale mines can use special purpose diesel fuel at the EU minimum rate, which is €21 per 1000 litres, until April 30, 2024.

From 1 May 2024, the excise duty rate on special purpose diesel will increase to €107 per 1,000 litres, while the oil shale mining sector will have to buy diesel at the normal rate.

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