Today, ministers will gather for a government meeting, where the head of the Ministry of Economics, Viktor Valainis (Union of Greens and Farmers), hopes to gain support from colleagues for the bill on the solidarity payment for fuel traders.
According to the official version, the bill is designed to prevent the owners of Latvian gas stations from the temptation to earn more than usual under the pretext of rising global oil product prices.
How Will the System Work?
The Ministry of Economics will calculate and publish the estimated retail price of fuel on the first working day of each week, no later than 10:00 AM.
"The estimated retail price is used as a tool for calculating the solidarity payment base. Its publication does not indicate the desired or recommended selling price for fuel retailers, and retailers retain complete freedom to set retail prices for their fuel," the bill states.
However, this "complete freedom" to set prices will turn into that very solidarity tax! The bill stipulates that the state will collect a solidarity payment:
n if the price exceeds 3 percent above the calculated figure by officials
n if fuel retailers cannot document the objectivity of the established price.
Everything Earned Through Hard Work – Will It Be Confiscated?
The payment will amount to 100 percent of this "inflated" price. For example, if officials decide that diesel should cost 2 euros per liter, and Circle K wants to sell diesel for 2 euros and 20 cents, then they are free to do so. But do not forget to pay the solidarity tax to the state treasury, which in this case will amount to 20 cents for each liter.
The retailers themselves have already called this tax not a tax or solidarity payment, but confiscation! They warned that they would attempt to challenge this law in the Constitutional Court. But court proceedings are not quick, and the law will come into effect immediately after adoption.
It cannot be ruled out that the bill will ultimately be delayed for further refinement or... to await the resolution of the conflict in the Persian Gulf. It should be noted that the solidarity payment is planned to be collected, if there are grounds, monthly until the end of this year.
What Else Has Been Proposed
At the same time, everyone understands that the solidarity payment may prevent speculative price increases but cannot curb the objective rise in fuel costs. Therefore, the Ministry of Economics is already considering the possibility of reducing the excise tax on gasoline and further lowering the excise tax on diesel fuel. The budget will hardly suffer from this, as the state will compensate for the "lost" revenue from the excise tax with additional income from VAT – after all, the higher the fuel price, the greater the VAT collection.
At the same time, the authorities are responding so slowly to the situation that... negative consequences have already occurred – inflation has begun to rise rapidly.
