Vucic announces fuel excise cut to 10 percent from Friday
On June 18 the president said he expects the government to cut the fuel excise from 20 to 10 percent as early as the next day, with the relief possibly scrapped entirely next week.
- Vucic said on June 18 the fuel excise will be cut from 20 to 10 percent.
- The change is expected on Friday, June 19, with the relief possibly scrapped entirely next week.
- He cited calmer oil prices following a ceasefire in the US-Iran conflict as the reason.
- The relief had earlier been introduced because of a sharp rise in world oil prices.
President Aleksandar Vucic said on June 18 that he expects the Serbian government to cut the fuel excise from the current 20 to 10 percent as early as Friday. He made the remarks while touring construction works near Novi Sad, adding that the relief could be removed entirely next week.
The move would unwind a measure introduced earlier, at a time of sharply rising oil prices on world markets. Part of the excise was then temporarily lowered to ease the pressure on prices at the pump. According to the explanation the president offered, the reason for the correction is the calming of the oil market after a ceasefire in the US-Iran conflict, which weakens the case for the relief.
The excise is a fixed amount the state collects per liter of fuel and is one of the largest components of the retail price of fuel. Cutting the excise lowers the price at the pump, while restoring it to the full amount pushes the price up. Halving the relief, and then possibly removing it, means the effect of the earlier cut would gradually be drained out of the price a driver pays.
What does the correction mean for the price at the pump?
The direction is clear: returning the excise toward its full amount acts upward on the retail price. The president outlined two steps, first halving the relief on Friday, then the possible full removal next week. That suggests the effect on the price could arrive in waves rather than all at once.
How much the change is felt on the price per liter depends on several factors outside the control of domestic fiscal policy. Chief among them are the movement of crude oil prices on world markets, the dinar’s exchange rate against the dollar and the euro, and the margins along the supply chain. If world oil prices are indeed calming, as cited for the move, part of the effect of restoring the excise could be cushioned by a lower import price for fuel.
The final amount and date of application are set by the government through its decree on maximum retail prices. Until that act is published, the president’s announcement remains an expectation rather than an officially set price.
Why was the relief introduced in the first place?
A temporary cut in the excise is a standard tool the state uses to respond to a sudden jump in energy prices. When oil prices rise sharply, the increase passes through to the price of fuel, and from there to the cost of transport, agriculture and the wider consumer basket. By cutting the excise, the state absorbs part of that pressure through lower budget revenue per liter.
The other side of that calculation is that every day of a lowered excise means less inflow into the budget. That is why such measures are introduced as temporary and tied to the duration of unusual market conditions. The plan to first halve the relief and then possibly remove it follows exactly that logic: if the reason for the measure has weakened, so does the justification for the state to keep forgoing that part of its revenue.
For households and businesses, the key question is how quickly and by how much the change feeds through to the price at the pump, since fuel enters almost every spending decision. Will you feel the change first on the price of a full tank or on the price of goods that reach you by truck?
