In Lithuania, the increase in excise duties since the beginning of January this year has led not only to an increase in wholesale fuel prices, but also to higher retail prices at petrol stations. The sector is already seeing the consequences of this decision.

„The initial effect of the Government's decision to increase excise duties on fuel is indeed worrying. Looking at the results for January, we see that diesel sales at gas stations dropped by 16.6% compared to the same period last year. This percentage change translates into a drop of 20 million litres of sales in January and a potential loss of 200 million litres in 2025. These millions of litres also mean at least 200,000 stops to fill up," shares Emilis Cicėnas, President of the Lithuanian Association of Petroleum Products Trading Companies.

The representative of the association stresses that these changes also have a negative impact on the state budget, as the transport sector, which accounts for a significant part of Lithuania's GDP, used to buy fuel in Lithuania until the new year, but has started to buy it in foreign countries with lower excise duties, such as Poland and even in Sweden.

„Looking at the Lithuanian fuel market as a whole (wholesale and retail together), the state collected around €10 million less excise duty in January compared to the same period last year. Fuel tax policy makers did not take into account that hauliers would switch and fill the budgets of other countries than Lithuania. However, despite a 50 million litre drop in fuel turnover in Lithuania in January alone (-26.7% y-o-y), Lithuania's roads continue to operate and pollution has not gone away; it is only the volumes of fuel sold in Lithuania that have fallen, for which businesses would pay excise duties to the Lithuanian budget, that have fallen," says Cicėnas.

According to the head of the Association, there is also a concern that foreign investors could potentially lose interest in Lithuania as an attractive country to invest in, which would add to the weight of the negative effect of slowing down business development, damaging employment and labour demand.

Drivers turn to Poland

The head of the association fears that these taxes will not be the end of the story as excise duties will continue to rise. Of the 20 million litres lost in January, around €6 million in VAT was not collected. This means that the budget could lose up to €200 million in total over the course of the year," the president of the Lithuanian Association of Petroleum Products Trading Companies predicted.

According to Mr Cicėnas, Lithuanian companies providing transport services buy and will continue to buy fuel in Poland as long as the price differential remains so significant. Since the beginning of the year, even in Sweden fuel has become cheaper than in Lithuania.

„By refuelling in our country, hauliers become uncompetitive in Europe. It can be predicted that the excise duty will also be a deterrent for potential investors, who will choose other countries, such as Poland, instead of our own," said E. Cicėnas.

Proposes to introduce a partial refund of excise duty

The Association of Lithuanian Petroleum Products Trading Companies is promoting an initiative to activate a partial excise duty refund mechanism for hauliers, so that businesses can continue to fill their tanks in Lithuania and make a significant contribution to the country's budget.

„Carriers, I believe, would refuel in Lithuania and contribute to Lithuania's budget if a partial excise duty reimbursement mechanism is introduced, which would make Lithuania competitive again with its neighbouring countries“, says the head of the association.