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Finance Ministry: LPG's price will not grow more than 1.5 santim after excise tax increase

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe increase of excise tax on Liquefied petroleum gas (LPG) will not cause its end price to grow more than 1.54 santim per litre, Finance Ministry reports.

The current minimum tax level in the EU is 1,000 kg per LVL 88. It is planned to increase it.

The approximate price of LPGin Latvia is 40 santim per 1 litre. By increasing excise tax, its price will be no more than 41,45 santim per 1 litre, the ministry emphasizes.

The excise tax burden is currently 5 santim per 1 litre of LPG. Excise tax for petrol is 28.9 santim per 1 litre. It is, however, important to remember that LPG consumption depends on the car’s installed type of LPG equipment: 10% – 20% (sometimes 25%) higher than petrol consumption. This is why the increase of LPG excise tax is calculated as equal to 6 santim per 1 litre of petrol assuming that LPG consumption is 20% higher than that of petrol. With that, the current excise tax for covering 100 km is approximately four times lower than that of petrol, FM explains.

In order to reduce the differences in excise tax burden between the two types of fuel, the excise tax on LPG should be increased to EUR 161 per 1,000 kg.

The expected impact on the state budget is estimated at LVL 2.8 million in 2014. It will, however, reach LVL 3 million in 2015 and 2016. The current goal of the Cabinet of Ministers is to make progress with the necessary bill and the budget and assess any future growth. FM plans to do this after the 2014 budget has been confirmed by the Saeima.

The matter of LPG excise tax in Latvia relates to the reduction of tension within society, because most drivers have the option of choosing cheaper fuel. In Europe, on the other hand, the current trend is to equalize all excise tax rates. Following this principle, the price of LPG could reach 70 santim per 1 litre, President of Latvia’s Fuel Traders Association Ojārs Karčevskis told LETA in an interview.

He says that the equalization of excise tax on fuel is viewed based on energy efficiency in Europe. Officials in Europe do not make decisions based on whether or not something has in impact on the social tension. Karčevskis says that Europe plans to increase the minimal excise tax rate on gas and set it at EUR 161. This would make LPG 1.5 santim more expensive. The current solution is similar to that planned by the EU. At the same time, he adds that if Europe were to make a long-term decision regarding the equalization of LPGs rate to that of petrol, prices could go up as far as 70 santim per 1 litre.

The expert says that the equalization of LPG excise tax rate’s with that of petrol and diesel fuel is not the most important problem of the near future. He also says that LPG is not particularly popular in Europe. It popular the most in Lithuania and popular the least in Estonia.

The current price for 1 litre for LPG in Latvia is 40 santim.


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  1. Eric says:

    This article has mixed up LNG and LPG. This is about LPG taxes, not LNG.

    Thumb up 0 Thumb down 0

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