Estonia, Markets and Companies, Transport

International Internet Magazine. Baltic States news & analytics Monday, 01.06.2020, 20:16

Transport cos: Estonia's low diesel fuel levy optimizing competition in Baltics

BC, Tallinn, 06.04.2020.Print version
Lowering the excise duty on diesel fuel would help Estonian road transport operators survive the crisis and remain in competition with Latvian and Lithuanian businesses, Estonian transport companies said. LETA/BNS.

Due to excise duties on fuel being lower in Latvia and particularly in Lithuania, international transport operators have been filling their tanks outside Estonia 50 percent of the time. For that reason, lowering the excise duty on diesel fuel to the same level as Lithuania would make life significantly easier for road transport operators, the "Aktuaalne kaamera" news program of public television channel ETV reported.

"These are difficult times and being able to fill our tanks at home would help us out a lot," CEO of transport company Jupiter Plus Jevgeni Sidorov told ERR. Motor fuel accounts for 30 percent of the company's costs, and the lowering of excise duty will be of significant help to Jupiter Plus, he said.

"We have yet to reduce any wages, but with the present situation, we might need to, and we also may have to make some people redundant," Sidorov noted.

If fuel sellers fulfill their promise to reduce the price of diesel fuel in proportion with the proposed excise duty cut, the price would decline by 14.5 euro cents per liter. As competition between road transport operators is fierce, Estonian companies are also planning to immediately reduce their prices to win back their market share from Latvian and Lithuanian competitors.

The state's revenue is estimated to decrease by 76 mln euros per year as a result of the excise duty cut. While according to Minister of Finance Martin Helme, the measure would help increase economic activity, opposition parties in the parliament do not deem it efficient and remain skeptical about the cut being carried on into end prices.

Chief economist at Luminor Tonu Palm has likewise said that the economy will be affected more by cuts in the excise duties on electricity and natural gas.

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