Transportation and storage industry in Latvia generates a rough 10% of national GDP and therefore has a significant impact on the economy. Overall, more than 70 thousand people are employed in the transit and logistics sector. Underlying railway sector contributes more than EUR 100 million in taxes each year. For specific goods and destinations railway transport is a more sustainable, environmentally effective and economically efficient transport mode in comparison to the road transport and therefore should be promoted, which is in line with one of the transport policy priorities of the EU development strategy ‘Europe 2020’ – to make carriage by rail more competitive than road transportation. To help implementation of this strategy, the railway sector is in need of governmental help, either in form of state aid or alternatively revision of national excise duty policy on fuel used in railway transportation. One example is to redistribute the revenue from excise duty on diesel used in rail transport to finance maintenance and development of railway infrastructure.