The government has decided to temporarily reduce the excise duty on standard diesel, in an attempt to mitigate the effects of the crisis on the oil and fuel market. The measure comes together with the introduction of a solidarity contribution for companies in the energy sector.
According to the authorities, the excise tax on diesel sold on the domestic market will be reduced by 30 money per liter, which means a total decrease of 36 money per liter, including VAT. The decision was adopted on Friday through an Emergency Ordinance.
The spokesperson of the Government, Ioana Dogioiu, explained that the measure will enter into force immediately and will be applied throughout the period in which the crisis is declared on the oil and fuel market. “This reduction applies starting with the entry into force, as we told you, of the Emergency Ordinance, during the declared period of crisis on the oil and fuel market”she said, according to News.ro.
Following the reduction, the excise duty drops from 2,804.29 lei per 1,000 liters to 2,504.29 lei for the same quantity, and in the case of tons, from 3,318.74 lei to 2,963.7 lei.
Tax on windfall oil profits
In addition to the excise duty reduction, the Government is also introducing a solidarity contribution for economic operators that extract or sell oil in Romania. “The solidarity contribution is applied within certain thresholds, by reference to the price of Brent oil, but as a result it represents 60% of the exceptional profit obtained during this period from the exploitation or exploitation and commercialization of Romanian oil”stated Ioana Dogioiu.
She emphasized that the mechanism is designed so as not to affect investments in the sector: “Those thresholds (…) are intended precisely so that this exceptional taxation does not affect, for example, the level of investments”.
The official also added that only profits considered exceptional in the current economic context will be targeted.
Estimated budget impact
The reduction of excise duty on diesel fuel will have an estimated budgetary impact of approximately 0.61 billion lei. At the same time, the solidarity contribution could bring to the budget between 0.07 and 0.65 billion lei, depending on the level of taxed income.
“The application of the temporary reduction of the diesel excise duty by 0.36 lei per liter will have an estimated budgetary impact of 0.61 billion lei. The introduction of the solidarity contribution will have a budgetary impact between 0.07 and 0.65 billion lei (…) so that together with the additional VAT quota obtained (…) it will be possible (…) to cover the state’s expenses to a large extent”Dogioiu explained.
According to the Government, the measures would support both consumers and affected sectors, such as agriculture and transport, where similar support schemes are already applied.
