Why Slovakia is one of Central Europe's most expensive countries to refuel

Drivers in Slovakia fill up with some of the most expensive petrol in the region. A litre of petrol is currently sold for €1.65 per litre.

In Austria today petrol costs €1.67/l, in Hungary €1.63/l, a litre of petrol €1.60 in the Czech Republic, and in Poland €1.54 per litre.

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Thus, travelling across the border to refuel is once again paying off for drivers in the country. Although petrol prices are also rising in neighbouring countries, in Slovakia the price increase is the most pronounced. Prices compared to other countries are higher due to consumption tax, writes Index magazine.

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The reason for more expensive refuelling is the conflict in Ukraine and tensions in the Middle East.

What makes up the consumer price

While in the case of diesel, the consumption tax from mineral oils (€0.368 per litre) is comparable to the surrounding countries, for petrol (€0.514 per litre) it exceeds the levels in Poland, Hungary, Austria and the Czech Republic.

In addition to consumption tax, the final price of fuel includes VAT of 20 percent (the basis for its calculation is the price of the commodity increased by consumption tax, ed.). The final price also includes a small fee for the management of state material reserves, €0.03965/l.

In total, taxes and fees make up more than half the bill that motorists pay at the petrol station when refuelling. The trader’s margin, from which they cover the costs of storing and selling fuel and make their profit, ranges from 1-3 percent. Thus, it is negligible.

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In general, the lower the price of petrol, the higher the percentage of taxes.

Important source of money

In 2020, when the pandemic paralysed the economy and petrol normally cost around €1.07/l, taxes made up 80 percent. Reducing the price below €1/l was practically possible only if the state reduced VAT or consumption tax.

A possible reduction of VAT or consumption taxes at a time when Slovakia needs to consolidate public finances seems unlikely.

Still, one of the opposition parties, SaS, came up with a proposal to reduce VAT from 20 percent to 8 percent, which would have to be approved by the EU.

In 2022, the National Bank of Slovakia, which is the Slovak central bank, recalculated that if the VAT rate for fuel were reduced by 15 percentage points, the state budget would lose €300 to €350 million a year.

An important source of state income is also consumption taxes – from alcohol, beer, tobacco, wine and mineral oils. Last year, they brought €2.54 billion to the state coffers, representing 10 percent of revenues. Approximately half of the income from consumption taxes comes from mineral oils. Last year it was €1.29 billion.