Alcohol, Estonia, Financial Services, Legislation, Markets and Companies, Taxation

The manager of the confederation, Toomas Tamsar, said that international road haulage companies have started to fill up the tanks of their trucks in neighboring countries after the hike.

"A liter of diesel at our filling stations costs on the average 10 cents more than in Latvia, Lithuania or Poland. Trucks with a fuel consumption of 35 liters or so per one hundred kilometers have tanks with a capacity of approximately 1,000 liters. Hence, going to Germany or the Netherlands, one can save 150-200 euros per trip or 100 euros per tank when refilling en route and avoiding refilling in Estonia," Tamsar said.

Tamsar said that according to figures from the Tax and Customs Board the amounts of diesel sold by fuel retailers in Estonia have declined by 9% this year. "Prior to it, the consumption of diesel has been growing at a rapid rate year after year and an increase of 5% was forecast by the Ministry of Finance also for this year. It is visible already now that a big portion of diesel is bought elsewhere, which means that also the excise duty and VAT go elsewhere," he said.

Estimates by the confederation suggest that if sales of diesel in Estonia decline 10%, 45 million euros less will flow into the state budget in fuel excise duty and VAT. A drop of 15% would already mean a shortfall of 70 million euros.

"We understand that the tax hikes were agreed between the coalition partners to finance important reforms. What happens now is that entrepreneurs are suffering and revenues of the state are declining. We wish that if an incorrect decision has been made it was admitted as quickly as possible and the mistake corrected. The 2016-2018 hikes of the fuel excise duty must be forgone," Tamsar said.

The hike effective from Feb. 1 raised the excise duty on gasoline by 10% and the excise duty on diesel by 14%. The rates of the duty at present are respectively 46.5 cents and 44.8 cents per liter.