On Thursday, 24 September, the Saeima approved amendments to the Law on Limiting Price Increases for Petroleum Products at its final reading. The legislation mandates a temporary reduction in excise duty rates for diesel fuel and unleaded petrol across Latvia, taking effect on October 1 and running through the end of the year.
Excise Tax Rates and Expected Price Reductions
Under the newly adopted amendments, the temporary excise duty rate for diesel is set to drop from 396 euros to 330 euros per 1,000 litres, matching the lowest rate permitted by European Union legislation. Meanwhile, unleaded petrol will face a temporary excise duty rate of 490 euros per 1,000 litres. However, this adjustment sits at less than half of the potential 20-cent price drop previously mentioned by the Prime Minister.
Did You Know? This marks the first time that the excise tax on petrol has been cut during the current period of rising prices in Latvia, with the diesel rate falling directly to the absolute minimum level permitted under European Union legislation.
Budget Impact and Retailer Rollout
Implementing the three-month tax reduction from October 1, 2026, to December 31, 2026, is forecast to negatively impact general state budget revenue by 14.4 million euros. Despite the legislative approval, consumers may not see immediate relief at the pump on October 1. The Latvian Fuel Retailers’ Association has pointed out that fuel on which tax has already been paid must be sold first, and the actual price reduction will depend on whether retailers choose to pass the full tax cut on to buyers.
Frequently Asked Questions
When do the new excise tax rates take effect?
How much are fuel prices expected to drop?
Authorities and reports indicate that prices could decrease by about eight cents per litre if retailers pass the full tax reduction on to consumers.
What is the financial cost to the state budget?
The three-month reduction is forecast to lower state budget revenue by 14.4 million euros, which officials plan to compensate using extraordinary receipts from the sale of property confiscated through criminal means.
? How will you adjust your driving or refueling habits ahead of the October price changes?