Fuel traders do not see a possibility for compromise regarding the proposed solidarity payment if their actual retail price exceeds the objectively calculated estimated retail price by more than 3%, said Ieva Ligere, executive director of the Latvian Association of Fuel Traders, to LETA.
"I don’t think a compromise is possible here. We fundamentally do not support such regulation, as it is based on political motives — it is an attempt to 'catch' voters' voices in the upcoming elections," she emphasized.
Ligere noted that fuel traders generally do not support the draft bill on the solidarity payment developed by the Ministry of Economics, as they believe it contradicts the principles of a free market and contains certain risks of non-compliance with the Constitution.
"This is not about a windfall tax; it is pure price regulation. This is a political initiative in an election atmosphere. Fuel traders do not see any economic justification for this, and there is no economic assessment of it," she said.
Ligere explained that the draft bill essentially attempts to regulate a price whose main components fuel traders cannot control, as 93% of the price consists of procurement costs and taxes, while only 7% is the part that the seller can operate with.
"And if restrictions are imposed on this 7%, the question arises — how proportional is this?" she emphasized.
Ligere also noted that traders will monitor the further progress of the initiative; however, there are a number of risks — for example, they pointed out to the Ministry of Economics the shortcomings of the formula for calculating the proposed payment.
"We do not see how a formula suitable for everyone can be created, as retail sellers have different fuel procurement conditions. The ministry itself also noted that there could be a situation where some small traders cease operations because they will not be able to survive under such regulation. This could reduce competition in the fuel market in the long term," the executive director of the association emphasized.
As previously reported, the government plans to continue evaluating the proposal from the Ministry of Economics to introduce a solidarity payment for fuel traders on Tuesday, April 7, if their actual retail price exceeds the estimated price by more than 3%.
Economy Minister Viktor Valainis previously stated to LETA that the initial findings regarding the reduction of the excise tax on diesel fuel are very negative and indicate the need to introduce a solidarity payment, or a windfall tax, for fuel retailers.
The minister noted that fuel prices are falling on global exchanges, while this is not observed in Latvia.
"Fuel retailers should reconsider their business policy because now words do not match actions," Valainis said.
It was also reported that on Wednesday, April 1, a law limiting fuel price increases came into effect, providing temporary measures to reduce the impact of rising prices on the economy and the population.
At the same time, fuel traders indicated to LETA that the reduction of the excise tax on diesel will be noticeable with a certain delay, as the new rate applies to fuel that starts to be exported from excise warehouses to gas stations from April 1.
The law provides for a temporary reduction of the excise tax on diesel fuel — from the previous 467 euros to 396 euros per 1000 liters. For marked diesel fuel used in agriculture, the rate is 21 euros per 1000 liters. The reduced rates will apply from April 1 to June 30.
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