Lithuania's budget to lose 30 million euros annually due to proposed gas excise cut

Some members of the Seimas (parliament) propose to reduce the excise duty to the EU's minimum level of 1,240 litas (EUR 360) per 1,000 liter, from 1,500 litas.

The ministry also doubts if gasoline consumption would rise by about 20 percent after the proposed excise tax cut and would thus offset the revenue loss.

"Lithuania would have difficulty meeting its commitments to the European Union and would risk having EU cohesion funds frozen due to an excessive deficit," it said in a note to the government.

The initiators of the amendments say that the price of gasoline would go down by around 0.3 litas per liter as a result of the proposed tax cut. However, the price of diesel fuel edged down by 0.08 litas in a month, much less than the anticipated decline of around 0.22 litas, after the excise duty on this type of diesel fuel was reduced in 2009, the ministry said.

"Lithuania currently applies the EU's lowest excise tax rate on gas oils, but the ex-tax price of gas oils is among the nine highest (in the EU)," it said.

Therefore, the ministry recommends not approving the amendment to the Law on Excise Duty, which has passed the first reading at the Seimas.