What the GEO stipulates regarding the reduction of diesel prices: From the reduction of the excise duty to the solidarity tax for oil companies
The Ministry of Finance put into public debate, on Thursday evening, a draft Emergency Ordinance aimed at reducing diesel prices. One measure is the lowering of the level of excise duty applicable to standard diesel, and the second is the establishment of a solidarity tax on exceptional revenues obtained from the sale of crude oil.
“The reduction of the excise duty will directly contribute to the decrease of the price at the pump, and the solidarity contribution allows a fair redistribution of the exceptional revenues generated in the current context of crisis”, said the Minister of Finance Alexandru Nazare, according to a press release from the Ministry of Finance.
The excise duty decreases by 30 money, and the price at the pump by 36 money
Thus, the excise duty on standard diesel is temporarily reduced by 0.3 lei/liter (30 money), starting from the date of entry into force of the normative act, during the crisis situation on the market of crude oil and petroleum products. The objective of the measure is to limit inflationary pressures and stabilize transport and distribution costs, which are essential for the entire economy.
At the moment, the excise tax is 2.8 lei / liter, the pump price being around 10 lei.
Under the conditions in which excise VAT is applied, the impact at the pump will be a reduction of 36 money/litre.
Solidarity tax between 1.5% and 9.9% on exceptional income
At the same time, a solidarity contribution is established applicable to economic operators that exploit and/or process crude oil extracted from the territory of Romania, in situations where the average monthly price of Brent crude oil exceeds the threshold of USD 70/barrel.
For companies that sell crude oil in an unprocessed state, the solidarity contribution is calculated by applying a percentage of 60% of the revenues from the sale of this crude oil.
The contribution is designed as a temporary and proportional mechanism, applied exclusively to exceptional revenues generated by the international context, and has a progressive character, with rates between 1.5% (for prices above 70.01 USD) and a maximum of 9.9% (for prices exceeding 140 USD/barrel).
The Ministry of Finance specifies that the measure is temporary, strictly targeting exceptional incomes.
The impact on the budget with the excise tax reduction is mitigated by the solidarity tax
The estimated budgetary impact of the excise duty reduction is approximately 610 million lei, while the revenues from the solidarity contribution are estimated between 0.07 and 0.65 billion lei, depending on the evolution of oil prices, the Ministry of Finance says.
The government announced on Thursday that the draft GEO will be approved on Friday, in an extraordinary meeting.
