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Estonia’s industrial businesses protesting against natural gas excise hike

Natural gas pipes. Photo is illustrative.
Natural gas pipes. Photo is illustrative. Source: (AFP/Scanpix)

Representative bodies of Estonia’s manufacturing industry submitted a joint appeal to the government regarding the planned excise tax hike on natural gas, finding the increase unacceptable.

"During the next four years, the gas excise tax will increase so much that energy-intensive industries will lose out on almost the entire leading edge that the fall in natural gas’ world market price has granted them this year," the appeal stated.

Natural gas prices and related taxes have undergone drastic changes beginning in 2014 — the price of natural gas has dropped 1.7 times, from 32 to 19 euros per Megawatt-hour, due primarily to a drop in the price of oil, however recent reports suggest that prices will be back on the rise in Estonia as well.

At the same time, the tax on natural gas has increased from 2.52 to 4.36 euros per Megawatt-hour since 2014. “The excise tax has been increased 20 percent per year for three years — three more years of an increase of 25 percent per year will in no way benefit our overall competitiveness and high value added in the manufacturing industry,” noted the representative bodies.

In the businesses’ opinion, the planned excise tax hike will negatively affect the competitiveness of Estonia’s exporting companies to such a degree that bigger natural gas consumers, first and foremost foreign-owned companies, will begin to consider moving production out of Estonia.

The industry also believes that gas heating may prove indispensable for manufacturing companies operating in larger towns and cities as it is not always possible to build biomass warehouses in town, and found that such taxing of resources would do no good for the bringing to or keeping of production in Estonia; they fear that such a sharp increase in businesses’ tax burdens could lead to job loss and decreases in wages.

Those submitting the joint appeal stated that natural gas is currently the most environmentally friendly of fossil fuels and widely used in industrial processes and found that it would be more logical to do the reverse of what is currently planned and make those who pollute more, pay more.

"Due to the increase in energy costs, businesses will lose investments in both production development as well as production capacity," the joint appeal stated. "The increasing of the tax burden on the manufacturing industry (including indirect taxes) has long since reached the point that the competitiveness of our businesses is low compared to that of our neighbors."

The co-signers of the appeal, which included the Association of Estonian Printing and Packaging Industry, the Estonian Association of Chemical Industry, the Estonian Plastics Industries Federation, the Federation of Estonian Engineering Industry, the Association of Estonian Food Industry, the Association of Construction Material Producers of Estonia, the Estonian Furniture Industry Association, the Estonian Electronics Industries Association, the Union of Electricity Industry of Estonia and the Estonian Employers’ Confederation, called upon the government to abandon their plan to increase the natural gas tax to such an extent.

Editor: Editor: Aili Vahtla

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