The reduced excise duty rate will be effective from April 1 to June 30, 2026. As a result of this measure, the excise duty rate in Latvia will be the lowest in the Baltic States, reports delfi.lv.
Currently, thanks to the increase in fuel prices, Latvia receives additional revenues in the form of taxes for 6.7 million euros per month. The market intervention for three months will amount to 20 million euros and will be fiscally neutral, as it will be offset by additional revenues.
If fuel prices continue to rise, other compensatory measures will be considered, but they will also be fiscally neutral.
Lithuania, Estonia and Latvia coordinate actions
The Baltic States – Lithuania, Estonia and Latvia – are coordinating actions in this regard. Estonia initially planned to raise fuel excise taxes from May 1, but now intends to abandon this step, while Lithuania is preparing solutions similar to Latvia.
In Latvia, the retail price of diesel fuel has increased by about 30% and is about 2 euros per liter.
The Finance Ministry estimates that without intervention, the additional costs to the Latvian economy could amount to about 50 million euros a month.
At the same time, the Ministry of Finance forecasts that the fiscal impact of the excise duty reduction on the state budget may be close to neutral, as the increase in fuel prices increases VAT revenues.
