Seven EU countries, as well as other European states outside the union, have already decided on substantial tax cuts – excise duties and VAT – to limit the impact of the fuel crisis on economies and consumers.
Italy, Portugal, Slovenia, Slovenia, Hungary and Spain were the first EU member states to reduce excise duties on petroleum products and Ireland recently joined them. In addition, Spain has also reduced the VAT rate on gasoline and diesel from 21% to 10%, says Adina Vizoli, Partner, PwC Romania, in a new analysis.
The most substantial excise tax cut was Italy's 30% for both gasoline and diesel, or 20 eurocents per liter (equivalent to 1 leu per liter), while Portugal lowered its excise tax by 21% for diesel (cuts of 7.6 eurocents per liter) to below the minimum threshold required by the European Commission.
Poland has also intervened forcefully in the fuel market, after being among the EU countries most affected by price hikes. Last Thursday, Prime Minister Donald Tusk announced a reduction in VAT on petroleum products from 23% to 8% and a cut in excise duties, concurrently with the introduction of maximum selling prices.
Other European countries that have already cut fuel taxes include Serbia, Montenegro, Albania, and Iceland. Even Norway's Parliament voted last week to lower fuel taxes.
Although some member states have implemented or announced measures to reduce the VAT rate applicable to fuel, it is important to emphasize that such measures are not, in principle, compliant with European VAT legislation. According to Directive 2006/112/EC on the common system of value added tax, which Member States are obliged to transpose, reduced VAT rates may exclusively be applied to the supply of goods and provision of services listed in Annex III of the Directive, and fuels are not among these products.
Therefore, in.
Romania has the fifth-highest excise duty on diesel in the EU (55 euro cents per liter) and the eighth-highest excise duty on gasoline (60 euro cents per liter), according to data compiled from the European Commission's Weekly Oil Bulletin. However, the high deficit limits options for intervention through tax reductions.
At the government level, a reduction in excise duties is currently being discussed, initially only on diesel fuel, according to the most recent public statements. An initial reduction of 5%is being considered, which could be extended in stages up to 25%, depending on the evolution of oil quotations and pump prices.
Fuel price increases in Romania, in line with those in Europe
Prețul motorinei în UE a crescut în medie cu 27,6% în perioada 26 februarie – 26 martie, cele mai mari scumpiri înregistrându-se în Suedia (43%), Cehia (42%) și Polonia (40%). La polul opus, cu creșteri sub 10%, sunt Slovenia, Slovacia și Ungaria, arată cele mai recente date săptămânale publicate de Comisia Europeană în cadrul Weekly Oil Bulletin. În cazul Slovaciei și Ungariei, evoluțiile reflectă deja tăierile de accize adoptate de cele două țări. Conform raportului, România a raportat o creștere sub medie a prețului motorinei din UE în ultima lună, de circa 20%.
La benzina Euro 95, creșterile de preț au fost ceva mai moderate, de 14,9% în medie la nivelul UE și 15,8% în România.
Although fuel price hikes in Romania have so far been less steep than in other European countries, these new hikes come as the local economy is weak and still facing one of the highest inflation rates in the EU.
The current crisis, similar to the one in 2022
The current fuel price crisis is not unprecedented. Russia's invasion of Ukraine caused a similar shock to oil markets, with prices rising for four months. It took about a year to return to near-normal levels.
The difference is that in Romania, price increases started from a higher level now than in 2022, mainly due to the higher level of taxes (excise duties and VAT) compared to four years ago. Compared to 2022, excise duties on gasoline and diesel are now more than 1 leu per liter higher.