Speaking to ETV morning show "Terevisioon," Kattai said: "When taxes go up, it's the consumer who pays," adding: "Fortunately, the excise hikes that took effect yesterday won't pose a major blow to wallets."

"But the fact remains that in recent years, Estonia's price levels have risen so much that even this small additional cost will be noticeable to many people," he added.

Kattai noted that rises in energy prices always trickle down to other prices. "The rise in the gasoline excise tax together with the VAT increase starting in July will be noticeable — about six cents per liter, and that is already significant," he said.

Kattai added the rise in auto fuel prices likely won't directly reduce consumption. "Those who need to travel will manage to buy the gasoline one way or another and will save on other expenses to cover that additional cost."

Prices in Estonia have risen over 40 percent in recent years, with an additional 5 to 6 percent rise expected this year.

As of Thursday, excise duty hikes on electricity, diesel fuel, natural gas, liquefied petroleum gas, light fuel oil, heavy fuel oil, and natural gas applied. The gasoline excise duty remained unchanged, for now, but will rise by 5 percent starting July 1, and then by another 5 percent per year for the next three years.

The current VAT rate of 22 percent will rise to 24 percent starting July 1.

The backdrop to the excise hikes is, those implementing them said, the excise duty cuts decided by the Center-EKRE-Isamaa government in spring 2020 to mitigate the Covid crisis. The Riigikogu prolonged these temporary reduced rates the following year. They started rising again from May last year and will continue annually until they return to pre-pandemic levels.

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