Government is considering a major change to the country’s fuel taxation system that could lower prices at the pump by up to 32.4 lek per liter, as part of its planned 2027 fiscal package.

The proposal, associated with Prime Minister Edi Rama’s government, would remove the circulation tax currently applied to fuel and shift part of the tax burden toward vehicle ownership. The aim is to reduce pressure on fuel consumers while preserving state budget revenues.

Under the current system, the circulation tax stands at 27 lek per liter, with the 20% value-added tax (VAT) also applying to the charge. If the tax is abolished and the reduction is fully passed on to consumers, the final price could theoretically fall by 32.4 lek per liter.

However, the proposed reform would not necessarily reduce the overall tax burden for every vehicle owner. Moving taxation from fuel consumption to vehicle ownership could mean that some motorists pay less at the pump but face higher costs associated with owning their vehicles.

Albania also has a temporary mechanism providing for a 20% reduction in excise duty when diesel prices exceed 220 lek per liter and gasoline prices surpass 200 lek per liter.

If the proposed circulation tax abolition and the excise duty reduction were applied simultaneously, eligible consumers could benefit from additional price relief. The actual impact would depend on the implementation of both measures and how fully the tax savings are reflected in retail prices.