Finland’s energy taxes to increase by a quarter in 2011

New tax regime aims to encourage a shift to renewable energy sources.

The government of Finland is planning to increase energy taxes by 25% at the beginning of 2011. Legislation on the tax increases will be debated in parliament in autumn 2010.

The state wants to collect more than EUR 4 billion in energy taxes in 2011, which is EUR 750 million more than this year. The tax on light fuel oil will go up from 8.7 cents per litre to 15.7 cents a litre. This will affect houses using oil-based heating systems in particular, as the state aims to encourage a shift towards renewable fuels for heating.

The tax on heavy fuel oil will rise from 6.7 cents to 14.85 cents per kilogram. Agricultural companies and greenhouses will be able to reclaim almost the whole of the tax increase. Peat will not be affected by the energy tax increase.

The tax on diesel is set to increase by 8 cents per litre but the propulsion tax on diesel cars will be reduced. The electricity tax on private households will increase from 0.88 cents to 1.7 cents per kilowatt hour. Mauri Pekkarinen, the Minister of Economic Affairs, believes that Finland will reach its renewable energy targets by thanks to energy from the country’s forests, which will be even more competitive with other energy sources after the tax changes. Currently three quarters of Finland’s wood pellets are exported to Sweden.

Source: Aamulehti