Lithuania weighs windfall tax on Orlen Lietuva but fears strain in ties with Poland
Lithuania is discussing a windfall tax on the refiner Orlen Lietuva, which is run by Poland's Orlen group. On Thursday Valis warned the move could harm relations with Poland while bringing only a small budget gain.
Lithuania is debating whether to impose a windfall tax on Orlen Lietuva, which operates the Mažeikiai oil refinery. The company belongs to Poland's Orlen group, so the decision could affect relations between Lithuania and Poland. The aim would be to ease the impact of higher fuel prices.
Warning about risks
On Thursday, Valis said there are several risks tied to international relations. According to him, an informal opinion has also been received from the Foreign Ministry, which would not support such a step. Valis described the risks as high and the potential effect as small, ranging from zero to 46 million euros. He added that Lithuania's situation differs significantly from Poland's.
Prime Minister Mindaugas Sinkevičius acknowledged that the discussion is at an early stage and that no political consensus has been reached. He stressed that the company's role as a major employer must be weighed alongside international and neighbourly relations.
Poland's example and earlier statements
Poland has already introduced a 60% tax on fuel companies' profits above a threshold based on standard profit margins. Its government expects to raise about four billion zlotys (940 million euros) to finance lower fuel prices.
Last week Ramūnas Dilba, an adviser to Lithuanian President Gitanas Nausėda, named such a tax as one possible measure, similar to the temporary solidarity contribution previously collected from large commercial banks' profits. He said it would not directly cut fuel prices, but the extra revenue could be used to soften the effect of higher fuel costs.
Former finance minister Kristupas Vaitekūnas had promised to propose a temporary tax on fuel wholesalers, saying that taxing Orlen Lietuva's windfall would be more complicated than doing so for banks. In April, then energy minister Žygimantas Vaičiūnas said Lithuania could introduce such a tax if Poland did, but that the decision should be coordinated with Poland to avoid market distortions and possible fuel shortages.
