Economy minister: State could lower price of fuel by 50 cents using taxes

Fuel prices on March 16.
Fuel prices on March 16. Source: Siim Lõvi/ERR

The price of gasoline exceeding €2 per liter is on the other side of the state's pain threshold, while we have no reason to fear the price will continue growing without end," Minister of Economic Affairs and Infrastructure Taavi Aas (Center) said on the "Otse uudistemajast" webcast on Wednesday, adding that government decisions could lower the price by up to 50 cents.

The price of gasoline 95 exceeded the €2 per liter mark for the first time in history a week ago.

Asked about the state's tolerance limit before intervening to lower the price of motor fuels, Aas said we are already on the other side of it. "The price exceeding €2 per liter is in no way normal," he said.

The minister said that the government could lower the prices through tax policy.

"Bringing it down by 40-50 cents would be the extent of the state's power as that is how far taxes go," Aas said, adding that market conditions and competition are bound to slow down price advance and no price can keep ballooning forever.

The coalition is still debating whether to lower the excise duty on fuel in the current situation. Aas remarked that the price of fuel can be used to rein in inflation.

"The fastest way to combat inflation is (addressing) fuel prices – talking about both the excise duty and VAT. While we could hope that prices would normalize by summer before (the Russian invasion started on) February 24, the sensible thing today is to prepare for the worst and count on fuel prices not falling, and to make decisions in that vein," Aas said.

He did not agree with Minister of Finance Keit Pentus-Rosimannus (Reform) in terms of lowering the excise duty rather having a modest effect on the price, while negatively impacting state budget revenue.

"Measures of individually modest effect add up for greater benefit."

Aas said that the government has made little progress on the excise duty debate so far. "But I think a supplementary budget cannot be avoided, and that it will have to deal with a lot of areas."

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Editor: Marcus Turovski

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