TIRANA, Nov. 14 – The proposed introduction of an excise rate on liquid gas for car use is expected to create confusion in Albania where liquefied petroleum gas, LPG, is traded at fuel stations both for household and car consumption from the same filling stations at undifferentiated prices.
The excise rate could leave room for price abuse against households and businesses who quite massively use liquid gas as a cheaper alternative to heating and cooking compared to much more expensive electricity prices unless fuel station owners install separate facilities for autogas. The tax authorities could also fail to collect the excise rate if filling stations declare all liquid gas for household consumption.
In its 2017 fiscal package, the Albanian government plans to collect an annual 600 million lek (€4.3 million) from the introduction of a 13 lek/litre (15.6 lek/l VAT included) (€0.11) on autogas. The hike is expected to affect thousands of car owners who have converted their petrol running cars to LPG due to significant lower prices and reducing consumption costs by an estimated 30 to 50 percent compared to running on diesel or petrol whose prices in Albania are among Europe’s highest due to the high tax burden levied on them.
Albania imports 25,000 metric tonns of liquid gas for car use annually and much more for household consumption.
“The application of an excise rate on liquid gas for car use at 13 lek/litre is being made in order to bring it closer to EU standards and regional countries taxing this product,” says the government in its explanatory report accompanying the 2017 budget.
“Considering that the annual import of liquid gas for car use is at about 25,000 metric tons a year, the effect on government revenue is expected at 500 million lek in excise rate and at 100 million lek in VAT accounting for a total extra revenue of 600 million lek (€4.3 million),” the report adds.
Albania’s liquid gas prices stand at 55 lek/litre compared to an average of 160 lek/litre on diesel and petrol whose tax burden is estimated at 100 lek/litre, making the record low international oil prices poorly reflected domestically.
As one of the countries where the Trans Adriatic Pipeline bringing Caspian gas to Europe crosses through, Albania is expected to benefit cheaper gas prices by 2020 when first gas flows are expected although the country currently lacks consumer infrastructure for massive gas use for cooking and heating purposes.
Earlier this year, the Albanian government asked liquid gas operators to build separate filling stations for gas cylinders and be responsible for their quality but incidents continue due to their poor condition and lack of technical controls.
Last February, a powerful gas cylinder explosion left at least 30 people injured, many of whom seriously, at a village bar near Pogradec in southeastern Albania.
Environment minister against
Speaking on Monday at the parliamentary trade committee, Environment Minister Lefter Koka opposed government plans to introduce an excise rate on liquid gas, saying that the measure does not help reduce pollution and car emissions.
“We have approved a government decision committing to reduce greenhouse gases, mainly coming from car emissions, until 2030. This discourages the increased use of liquid gas,” said Koka, calling on the government to revise its excise rate plans.
Lefter Koka, represents the Socialist Movement for Integration, the ruling Socialist Party’s junior ally in the coalition government.
Only 3 percent of some 500,000 motor vehicles in Albania, are estimated to run on liquid gas.
