The Saeima majority, despite the opposition's resistance, supported and began reviewing a special law prepared by the Ministry of Economics, which allows the state to seize "excess" profits from fuel traders.
Namely: if traders unjustifiably "inflate" prices, that is, if the markup exceeds at least 3 percent, all these "additional" funds will be seized by the state treasury.
Deputy Andris Kulbergs warned about the dangers of attempts to regulate prices in a market economy in this way. “We in Latvia will return to Soviet times when there was a sign with the name of the sausage in the store, but there was no sausage itself! It will simply become unprofitable for fuel traders to supply fuel here at some point, a shortage will arise, and we will be discussing the next government initiative in this very Saeima hall — about introducing fuel coupons to allow refueling those whom we consider to need it more. Is this what you are aiming for?!” the opposition parliamentarian lamented.
In turn, the head of the faction of the Union of Greens and Farmers, Harijs Rokpelņš, stated that this bill would prevent fuel traders from the temptation to gain excessive profits amid the excitement caused by rising prices.
It is noteworthy that the traders themselves called the proposed measure "intervention" a de facto confiscation of profits and did not rule out an appeal to the Constitutional Court. The law is expected to be adopted after the May holidays.
At the same time, the opposition's proposal for a more rapid reduction of the excise tax on fuel, which could realistically lower fuel prices, was rejected by the Saeima majority.
Is it true that Brussels will punish us?
Interestingly, recently the "green farmers" mentioned the need to reduce VAT on fuel in order to achieve a more realistic reduction in the cost of diesel fuel.
However, yesterday the Ministry of Finance already gave a "rebuff" to the Union of Greens and Farmers, referring to... Brussels. The Ministry of Finance believes that reducing VAT specifically on fuel is not allowed by the European Union directive.
This is a rather controversial argument, since, firstly, the directive, unlike a regulation, is not strictly mandatory, and secondly, a number of EU countries, including Poland, reduced the VAT rate during the COVID pandemic, including on fuel, and no sanctions from Brussels followed.
Moreover, the European Commission this week launched an initiative to coordinate efforts among EU countries in creating reserves of gas and petroleum products. Thus, Brussels has already effectively recognized the crisis situation in the energy resources sector.
