Increase in excise duties on fuel in Ukraine: what awaits consumers?

In Ukraine, an increase in the prices of gasoline, diesel fuel and liquefied gas is expected due to the increase in excise taxes. However, the price increase will not be too significant, and the fuel shortage does not threaten the country. This was reported by Serhii Kuyun, director of the A-95 Consulting Group.

Since the beginning of the war, Ukraine has built a new logistics system for the supply of fuel, which ensures stable supplies. Kuyun emphasized that this system is very extensive both geographically and logistically. According to him, this is one of the main reasons for confidence in the availability of fuel on the market.

Over the past three years, the fleet of gasoline trucks in Ukraine has increased significantly. "The number of gasoline trucks has increased fourfold, that's thousands of cars. Therefore, even in the current conditions of war, it is difficult to imagine a shortage of fuel," Kuyun noted.

According to the expert, in May the prices of diesel fuel decreased by more than 2 hryvnias. Gasoline has also fallen slightly in price, and liquefied gas has become cheaper recently. Kuyun believes that after the increase in excise duties, there will not be a significant jump in fuel prices. He is sure that this especially applies to gasoline and diesel fuel.

However, liquefied gas can become more expensive. According to calculations, it will still remain profitable for consumers, although the price increase will be noticeable. Kuyun explained that excise duties on gasoline will increase by UAH 1.5/l, on diesel fuel by UAH 2/l, and on autogas by UAH 5.5/l.

The reform, which provides for an increase in excise taxes, is designed for four years and will last until 2028. That is, prices will rise gradually. As Kuyun noted, if excise taxes were introduced today, Ukrainians would hardly notice the changes, since the drop in purchase price compensates for the increase in excise taxes.

On May 10, the Cabinet of Ministers approved a new draft law that provides for a gradual increase in excise taxes on fuel until January 1, 2028. According to the draft law, the excise tax on gasoline will increase to 359 euros per 1,000 liters, on diesel fuel - to 330 euros per 1,000 liters, and on liquefied gas - to 277 euros per 1,000 liters.

In addition, the new draft law defines the term "intermediate products" to include wines and other fermented beverages with an alcohol content of 1.2% to 22%. The excise tax on these products will also increase from 8.42 to 12.23 hryvnias per 1 liter. Starting July 1, 2024, annual rate increases are scheduled until 2028.

Thus, the increase in excise duties on fuel will not lead to significant price increases for consumers, but will ensure a gradual increase in prices. Supply and logistics systems that are already in place will help avoid fuel shortages in Ukraine.