The new changes affect the state budget with 2.5 billion lek (Euro 17.5 million)
TIRANA, April 9 – Car taxes which since September 2011 have seen a sharp rise for second-hand cars more than 10 years old will have the taxes cut in a move taken just two months ahead of next June’s general elections. After being ordered by Prime Minister Sali Berisha to draft new changes that would halve annual taxes, Finance Minister Ridvan Bode has announced the new formula that halves annual taxes for cars. On his Facebook profile, minister Bode says taxes will be reduced by cutting the fixed petrol and diesel rates in the calculation formula, automatically having the taxes.
The decision approved on Wednesday’s government meeting foresees the fixed rate for diesel will be cut to 12.5 lek, down 25 lek currently while the petrol rate will be halved to 10 lek down from 20 lek. Currently, a six-year-old diesel car with 1,600 cc engine, pays 8,000 lek in annual taxes but will pay 4,000 lek after the new changes enter into force.
The new changes affect the state budget with 2.5 billion lek (Euro 17.5 million) and are expected to enter into force next June.
“This is a concern raised by many citizens and at the same time provides a solution to an injustice which punishes those who can’t afford having a new car,” Prime Minister Berisha has said.
In late Sept. 2011, a new law unblocked the sales of second-hand cars whose transactions had dropped by 25 percent during the first eight months of 2011.
The removal of customs duties was accompanied with a new taxation system based on cars’ age, the engine capacity and the kind of fuel they use. The new law excludes cars produced during the past three years from their annual taxes but applies a progressive coefficient of 0.18 for cars produced in 2010 and a +0.01 coefficient for each year before. The tax is calculated by multiplying the car’s engine capacity (cc), with a progressive coefficient starting at 0.18 and a fixed tariff of 25 Lek for diesel cars and 20 lek for petrol ones, now at 12.5 lek and 10 lek respectively. The new formula sharply increased taxes for cars older than 10 years and kept annual taxes for newer cars at the same or slightly lower levels.
After a sharp increase in late 2011 following legal changes lifting customs duties, car imports slowed down in the first three quarters of 2012 when they rose by only 7 percent, according to data published by state Institute of Statistics, INSTAT. Data show some 30,386 cars, mostly second-hand ones, were cleared through customs in the first nine months of 2012, compared to 28,391 during the same period in 2011. Having to pay only 20 percent in value added tax, some 51,894 cars were imported in 2011, more than treble compared to 2010.
