Finance Ministry data show fuel imports for the first 11 months of 2011 were at around 388,492 tonnes, down 47,000 tonnes or 11 percent compared to the same period in 2010
By Ervin Lisaku
TIRANA, Feb. 15 – As crisis impacts escalate, Albanians have cut down on the so-called luxury items such as fuel, tobacco, coffee and beer. Forced to spend more on basic food products as global food prices soar, import of these excise products has registered a considerable decline compared to 2009 when Albania remained one of the few countries to register positive growth.
A recently published report by the Finance Ministry shows the sharpest drop in imports has been registered for fuel and cigarettes whose excise taxes have undergone considerable increases during the past couple of years, making them unaffordable for a considerable number of Albanians.
Finance Ministry data show fuel imports for the first 11 months of 2011 were at around 388,492 tonnes, down 47,000 tonnes or 11 percent compared to the same period in 2010 and 5,692 tonnes or 1.5 percent less compared to the same period in 2009.
With oil prices currently standing at an average of 185 lek/litre, owning a car is becoming a burden for average Albanians, which is also revealed by less traffic even on Tirana streets. Under a new law, in force since Sept. 2011, owners of old cars have faced a sharp increase in annual taxes, and now cars produced in the early 90s or before are rarely seen on the roads.
One month before the new road circulation tax applying a fixed 5 lek fee entered into force yet, Albania saw an unprecedented boom in fuel imports. Data show diesel import in August 2011 rose by 44 percent to 72 million tonnes, up from 50 million tonnes in August 2010, while petrol imports rose by 10 percent to 17,465 tonnes.
Tobacco consumption has also sharply fallen as cigarette prices have climbed to record highs varying from the cheapest 150 lek to 250 lek per packet. Data show tobacco consumption for the first 11 months of 2011 was at 2,890 tonnes, down 1,110 tonnes or 28 percent compared to the same period in 2010 and 2009. Claimed smuggling has had a minor impact, as cigarette packs without excise stamps are hardly found even in street vendors. Cigarette prices during the first days of 2011 registered a 30 lek (20 Eurocent) increase per packet following the entry into force of a law increasing the excise tax by 20 lek per packet starting from January 1, 2011. The measure was aimed at discouraging the country’s high smoking rate but failed to bring government an expected extra 28 million dollars for 2011 because of the boom of imports in late 2010 when the law was under discussion in Parliament. Under the changes approved by majority members of Parliament, the excise tax on tobacco will further increase by 20 lek (20 US cents) per packet, climbing to 70 lek, up from 50 lek currently.
Coffee is probably the most surprising item to have registered a drop in Albania, known for its massive coffee culture. In the first 11 months Albania imported 6,053 tonnes of coffee, down 307 tonnes or 0.5 percent down compared to the same period in 2009.
Meanwhile, consumption of imported beer in 2011 dropped by around 15 percent to 28.8 million compared to 2009. However, the drop may be attributed to increased domestic consumption.
Domestic consumption
The Valued added tax (VAT), representing the majority 40 percent of total tax revenues, and being an indirect indicator of domestic consumption, continued underperforming even in 2011 failing to meet reviewed targets even after mid-year budget cuts. Finance Ministry data show tax authorities collected around 120 billion lek in VAT during 2011, registering a 4.6 percent increase at a time when annual inflation was at 3.5 percent.
VAT is imposed on almost every product and service at a 20 percent rate.
Meanwhile, excise collection growth in 2011 dropped to 4.2 percent compared to an annual 15 percent in 2010.
For 2012, government has forecast an overoptimistic 7.8 percent growth in revenues at a time when revenues in 2011 were up by a mere 1.75 percent, hitting a record low for the past decade. With government spending huge amounts during the past two months on electricity imports and domestic consumption unlikely to recover as both consumers and businesses remain pessimistic, government will possibly be forced to make the sharpest mid-year budget cuts for the third year in a row. Its GDP growth target for 2012 at 4.3 percent is 8 times higher compared to what IMF has recently forecast for Albania.
Customs administration to collect all excises
Albania’s customs administration will soon be responsible for the collection of all excise tariffs, according to a draft law compiled under EU assistance. The draft law will strip the tax administration of collecting excise on cigarettes and alcoholic beverages and domestically produced fuel by the ARMO refinery in an effort to improve excise collection, the second most important tax after VAT. Introducing the draft law at a meeting with the Albanian Business Consultative Council in late 2011, Economy and Trade Minister Nasip Naco said “the collection of excise for imported and domestically produced products is a key condition for the customs administration based on EU member country experience.” “The gist of this law stands at the computerization of all procedures through an online platform for all businesses increasing both transparency and efficiency,” added the Minister.
