TIRANA, May 21 – The new tax hikes on both fuel and tobacco have considerably curbed imports of these two excisable products in early 2015, with government taking extra measures to curb alleged smuggling.
Finance Ministry data shows fuel imports in the first four months of this year dropped to 111,930 tonnes, down 7.6 percent compared to the same period last year and 5.3 percent less compared to 2013.
However, customs authorities say the situation is a result of higher domestic production by local Armo refiner which has been taken over by an Azerbaijani company.
Fuel prices in Albania have slightly increased to 176 lek/litre (€1.22) reflecting a hike in international oil prices which at around $66 a barrel, are almost half compared to their peak level in mid-2014.
Data published by GlobalPetrolPrices.com this week show Albania’s diesel prices stood at Euro 1.21/litre this week, higher than Macedonia’s Euro 0.92/litre, Montenegro’s Euro 1.19/litre.
Starting January 2015, the circulation tax, currently at 17 lek/ litre, has increased by another 10 lek (12 lek VAT included) taking it to 27 lek litre (Euro 0.19), not to mention the excise tax at 37 lek/litre, the carbon tax at 1.5 lek/litre on petrol and at 3 lek/litre on diesel, VAT at 20 percent, and other customs duties which make fuel prices in Albania among the highest in the region and Europe despite the country having one of Europe’s lowest GDP per capita.
Fuel imports, which meet the overwhelming majority of the country’s needs rose to 481,775 tonnes in 2014, up 4.8 percent compared to 2013, but down 0.5 percent compared to the peak level of 484,392 tonnes in 2010.
Tobacco imports also hit a record low in the first four months of this year fuelled by higher excise rates making cigarette prices unaffordable for many smokers.
Finance Ministry data shows tobacco imports dropped to 629 tonnes in the first four months of this year, down from 683 during the same period last year and a record high of 1,118 tonnes in the first four months of 2010 when the excise rate was at almost half of the current 110/lek (€0.77) per 20-cigarette packet.
Rising cigarette prices due to continuous hikes in customs duties levied on tobacco in an effort to curb widespread smoking and smoking-related diseases has sharply curbed tobacco imports in Albania which in 2014 hit a record low for the past decade.
Data published by the country’s customs administration shows tobacco imports in 2014 hit a record low of 2,976 tonnes, down 20 percent compared to 2013, and one-third less compared to peak level of 4,500 tonnes in 2010.
Unaffordable prices has pushed a rising number of smokers shifting to cheaper domestic hand-rolled tobacco, most of which is traded informally, traders say.
Starting this year, the excise duty on 20-cigarette packs has increased by another 20 lek (Euro 0.14), taking the total excise rate to 110 lek (€0.77) per packet. The Finance Ministry says that under an EU directive the minimum excise rate on cigarettes should be at 57 percent of the retail prices, compared to the current 34 percent in Albania.
“Excise rates on tobacco will gradually increase until 2017 to reach the minimum rate of excise duty in EU countries. We believe the curb of the smoking rate will have a direct impact on improving health care and a social and economic impact,” Health Minister Ilir Beqaj has earlier said.
Recent amendments to the law banning smoking in enclosed public spaces have considerably tightened penalties on violators and the implementation of the law seems back on track after it was massively ignored since its entry into force in May 2007.
With a smoking rate of around 40 percent, one of Europe’s highest, Albanians are estimated to spend more than 300 million euros on tobacco products every year.
