"This is the only way for us to maintain competitiveness and the market, but the excise policy is now very difficult to tear apart, because we need money for defense and those excise taxes are constantly being increased" --- Lithuania loses millions and competitiveness as carriers refuel in Poland

 

"After Poland temporarily reduced the value-added tax (VAT) rate for some fuels this week, international and some Lithuanian carriers refuel in Poland, while Lithuania loses millions and loses in the competitive battle, say representatives of the country's business.

 

At the same time, the president of the Lithuanian Innovative Energy and Trade Association (LIEPA) says that fuel that is 30-40 cents cheaper in Poland no longer surprises anyone, and Lithuania's competitiveness problem in the fuel market is in no way solved: "We are no longer catching up with our neighbors."

 

“The algorithm that operates today is clear – Poland is a country with cheaper raw materials than Lithuania, so companies and carriers that calculate and find it profitable to refuel (fuel – BNS) in Poland do so,” said Povilas Drižas, Secretary General of the International Transport and Logistics Alliance (TTLA).

 

Erlandas Mikėnas, head of the National Association of Road Carriers “Linava”, which unites smaller companies, says that fuel purchases in Lithuania have been “completely stopped”.

 

“Practically everyone is trying to plan tasks and routes in such a way that fuel is refueled in countries where it is cheapest. Since we compete with many countries, fuel costs are very important”, explained E. Mikėnas.

 

In turn, Sigitas Žilius, Secretary General of the Lithuanian Carriers Union, which unites 460 companies, estimates that the country loses about 3 billion euros annually due to foreign carriers not refueling in Lithuania, and the competitiveness of its fuel market is “zero”.

 

“Every year, less and less diesel is being filled in Lithuania. If previously Lithuanian carriers would only go there from Marijampolė, Lazdijai, now it is already worthwhile to go from Kaunas to Poland to fill up,” said S. Žilius.

 

According to him, the higher transportation costs for local carriers that cannot reach Poland, filling up in Lithuania, ultimately affect end consumers: “Our food products and other goods become more expensive.”

 

“There are locals, those who transport milk, sausage, drive to shops, transport furniture throughout Lithuania or raw materials, grains and do not reach those Polish or Latvian gas stations,” explained S. Žilius.

Restore market competitiveness

 

At the end of June, the Seimas adopted amendments to the Law on Excise Taxes for consideration after submission – a decision will be made whether to allow freight carriers to recover part of the diesel excise tax with reservations from January next year.

 

A partial excise tax refund is proposed for tractors, road trains and long-distance trucks transporting large loads, which could be done in two cases: if the diesel is purchased by a company that has a license from an EU country to transport goods and whose tractors have a maximum permissible mass of over 3.5 tons, as well as if the diesel is used in N3 class vehicles.

 

According to the Secretary General of the TTLA, a partial excise tax refund would be justified for Lithuania in order to maintain competitiveness in the region.

 

“Diesel in this case is one of the main cost components for international transportation. Naturally, increasing costs for raw materials automatically raise both transportation prices and prices for the end user,” said P. Drižas.

 

“This would be a step forward, but we have been raising this issue for about 10 years. We have long proposed to do as countries such as Luxembourg and Belgium, which are currently competitive in terms of fuel, did, but they did not listen to us,” E. Mikėnas assured.

 

As stated by the Secretary General of the Lithuanian Transporters’ Union S. Žilius, “a lot of hope is placed” on Finance Minister Taurimas Valis and it is hoped that a solution will be found so that the state earns.

 

LIEPA President Kristina Čeredničenkaitė states that last year Lithuania lost about 16% of the market, did not sell about 300 million liters of diesel.

 

“This year the market is still falling. This means that not only businesses are saving, but also individuals are saving. The conflict in the Middle East has also contributed to this. We see the only way out, which all businesses are offering absolutely unanimously today, is to make a partial excise tax refund,” explained K. Čeredničenkaitė.

 

“This is the only way for us to maintain competitiveness and the market, but it is very difficult to tear up the excise policy now, because we need money for defense and those excise taxes are constantly being increased,” she added.

 

Currently, the Excise Law does not provide for the possibility for businesses to recover the part of the excise tax paid for the purchased diesel.

 

On August 17, Poland reduced the value-added tax (VAT) applied to fuel and claims to be aiming for the lowest fuel prices in Europe. By the end of August, the VAT rate for some fuels has been reduced from 23% to 8%.

 

It is estimated that the VAT reduction will reduce fuel prices at gas stations by up to PLN 1 (EUR 0.23) per liter, depending on the type of fuel.”