Politicians warn fuel prices in Latvia could rise sharply in coming weeks
Latvian MP Artūrs Butāns warns that without further government action, fuel prices could jump dramatically in the coming weeks. A temporary VAT cut on fuel is being considered as a solution.
Speaking on TV24's news program "Ziņu TOP," Artūrs Butāns — deputy chairman of the National Alliance parliamentary faction and a candidate for the 15th Saeima — said that without additional measures, fuel prices in Latvia could rise dramatically in the coming weeks.
Butāns noted that while fuel prices in other countries are sometimes even higher, Latvia still needs to find solutions so that rising prices don't hinder economic growth. He pointed out that in neighboring countries a liter of fuel already costs around 2.40 euros, and in Scandinavian countries as much as 2.70 euros. Latvia took a first step over the summer by temporarily cutting excise tax on fuel through the end of the year, but according to Butāns, that alone is no longer enough.
VAT cut proposed as a solution
One option put forward by the Ministry of Economics is a temporary reduction of value-added tax on fuel. Butāns explained that such an approach has already been used elsewhere in Europe, though it could raise questions about compliance with European Union rules. Specifically, officials are considering lowering the VAT rate on fuel from 21% to 12% through the end of the year, which would cut around 15 cents per liter.
Butāns also stressed the broader impact of rising fuel costs: more expensive fuel raises the cost of transporting goods, which in turn pushes up prices in stores and fuels inflation overall — a direction he said is not where the country wants its economy heading.
