Estonia, Markets and Companies, Transport

"Lowering excise duties is an important decision. Why we want to lower -- it is a measure which clearly supports economic activity," Finance Minister Martin Helme said at the government press conference on Thursday. 

The government has approved a cut in the duty for diesel by 25 percent to 372 euros per 1,000 liters.

"This is equal to the rate in Lithuania, and with this we will make diesel cheaper than in Latvia, where currently [a rate of] 414 euros per 1,000 liters applies," Helme said.

"It has to be observed that we do not think that we'll have the same price as in Lithuania, as in Lithuania a different biocomponent requirement applies, and Lithuania also has an oil refinery of its own where fuel is sold also without intermediaries, but in principle that price difference will be extremely small," the minister said. 

"We expect filling up outside Estonia to decrease substantially as a result. At present nearly half of international haulage fills up outside Estonia," the minister said, adding that also filling up by transit traffic headed to Finland and Sweden in Estonia in great probability will increase. 

The reduction in the tax rates is expected to slow down the fall in consumption that has started due to the emergency situation. Before the tax cut, the Ministry of Finance forecast a drop of 100 mln euros in excise revenue due to the deterioration of the economy. 

Together with the cut in the tax rate for diesel also a number of other duties such as those for light and heavy fuel oil and shale oil for hating will decline, whose budgetary impact is extremely small. 

The duty on natural gas will be halved from 79.1 euros to 40 euros per 1,000 cubic meters. For households natural gas will become 7.1 percent cheaper, Helme said. 

The excise duty on electricity will be lowered to the minimum level allowed in the European Union, meaning 1 euro, which is estimated to translate into a reduction of 2.1% in the price of electricity.