Saeima extends reduced diesel excise duty until end of year

On Thursday, the Saeima passed final amendments to the Law on Limiting Price Increases of Petroleum Products, keeping the reduced excise tax on diesel in place until the end of the year. Initially, the support measure was set to expire on June 30, but coalition parties agreed to extend it.

The excise tax on diesel was reduced from €467 to €396 per 1,000 liters, while marked diesel for agriculture stands at €21 per 1,000 liters. The measure was introduced in response to tensions in the Middle East and instability in energy markets.

Harijs Rokpelnis, head of the Union of Greens and Farmers faction, noted that although there are signs of stabilization, there is no guarantee of long-term stability, and fuel prices remain higher than before the conflict. Jurģis Miezainis, parliamentary secretary of the Ministry of Economics, emphasized that instability in energy markets persists, and the reduced excise helps ensure predictability.

The Ministry of Finance previously warned that the extension could lead to a monthly revenue loss of approximately €2.4 million, given fuel prices below €2 per liter. Ministry representative Ilmārs Šņucins called for evaluating compensatory mechanisms if needed.

Regarding the extension period, Rokpelnis explained that a longer term saves administrative resources and may help curb inflation, while allowing for a review if prices drop significantly.

The amendments also include technical changes: if a trader has diesel with reduced excise in stock on December 31, 2026, no special excise inventory will be required from January 1, 2027.

This year, the average diesel price in Latvia peaked at €2.12 per liter in the week of April 6–12, while the historic high was recorded in June 2022.