Finance minister proposes postponement of excise duty rise
Minister of Finance Keit Pentus-Rosimannus (Reform) proposed keeping taxes for fuels and electricity at the 2020 level on Tuesday. Last week, electricity prices rose to a record high.
Pentus-Rosimannus said the rapid rise in prices means the situation has changed radically.
"Discussions on the budget are still ongoing, but it can be said the government has no desire to give impetus to further price increases during the conditions of accelerated inflation," she told the Riigikogu.
The minister said the most important parts of the 2022 budget will be agreed by the end of this week and it will be submitted for discussion on September 30.
Chairman of the Center Party Jüri Ratas and the opposition Social Democratic and Isamaa parties have all called for the cancelation of excise duty rises due in April 2022.
In the spring of 2020, amid the coronavirus crisis, the government decided to temporarily reduce excise duties on diesel, gas and electricity from May until the end of April 2022.
According to the decision, the state reduced the excise duty on diesel fuel from €493 to €372 per 1,000 liters.
The duty rate on natural gas decreased from €79.14 to €40 per 1,000 cubic meters. The rate of excise duty on liquefied petroleum gas used as fuel fell almost halved, from €107.71 to €55 per 1,000 kilograms.
The excise duty rate on electricity decreased from €4.47 to €1 per megawatt-hour, the minimum rate allowed by the European Union. Electricity prices for consumers fell by 3.1 percent.
However, last week electricity prices hit an all time high in Estonia and are not forecast to fall in the coming months. Prices are also rising across Europe.
The reasons for this include a bad summer for renewables and rising consumption. The price of coal has tripled, the price of natural gas has grown 2.5 times and the price of CO2 quota almost doubled over the past year.
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Editor: Helen Wright