Tirana Times
TIRANA, July 11 – Oil prices are expected to undergo another increase of 5 lek (3.6 Eurocent) per litre starting from next September following some changes government has approved on the import of cars and their annual taxes. While cars’ customs and sale fees are lifted, the carbon tax for diesel and petrol will increase by 5 lek/litre starting from September 2011 when the new law enters into force. The carbon tax for diesel, currently at 3 lek/litre will increase to 8 lek/litre while the carbon tax for petrol will rise to 6.5 lek/litre, up from 3 lek/litre currently.
Starting from January 2012, the carbon tax will increase by another 2 lek/litre or 7 lek compared to current prices, says the Finance Ministry.
Government expects to collect an additional 375 million lek from carbon tax in the last four months of this year.
Oil prices continue to remain at their highest historical levels in Albania, even through the beginning of this year with diesel and petrol sold in some petrol stations at 170 lek/litre (1.7 dollars) despite a slight decrease of 5 lek/litre. Experts explain the causes of the current situation by citing the soaring prices in international markets where prices are reported to have reached 100 dollars per barrel. The depreciation of the national currency, lek, against the US dollar and the Euro is another factor. The high tax burden, with excise tax currently at 37 lek/litre, VAT at 20 percent, the newly increased carbon tax, port taxes and transport expenditure, all contribute to the final high price of oil.
Nikolin Jaka, the chairman of the Tirana Chamber of Commerce and Industry called on government to review the excise tax rates on fuel, a suggestion which was rejected by Finance Ministry officials.
“Our country has the highest fuel prices both for industries and consumers. Oil prices in Albania have reached at 1.4 Euro/litre, prices which are not found even in Greece or FYROM,” said Jaka during a meeting with the business consultative council where the new fiscal package was discussed.
Auto taxes to be calculated according to new regulations
The current annual traffic and registration taxes car owners pay have been replaced by a new formula similar to that of import in customs procedures. The new draft 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 2008 and a +0.01 coefficient for each year before. The new formula increases taxes for cars older than 10 years and keeps annual taxes for newer cars at the same or slightly lower levels.
The new tax varies depending on the car’s horsepower, years of usage from the moment the customs duty has been paid, and the kind of fuel it uses. It is calculated by multiplying the car’s engine (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. The progressive coefficient starts at 0.18 if the car is four years old increases by 0.01 for each year until the 10th year of manufacturing. If more than 10 year old, the coefficient starts increasing by 0.04 per year.
For example, a person owning a 2000 cc diesel car produced in 1995 currently pays 12,400 lek in annual traffic and registration taxes. Under the new law, the owner of this 16-year-old car will pay almost double under the formula of (2000 cc x 0.48 which is the coefficient on 16-year-old car x 25 which is the fixed tax on diesel totaling 24,000 lek.)
However, newer cars with a smaller engine benefit from the new formula as the coefficients are quite low. The owner of a 1600 cc petrol car produced in 2001 currently pays 9,400 lek in traffic and registration taxes but will pay 7,680 under the new formula.
The measure is expected to bring government an additional 1.2 billion lek for the last four months of 2011 and an extra 4.9 billion lek in 2012.
The new draft law lifting customs duties for the import of cars and taxes for their sales within Albania is expected to revive the domestic market which has been in stagnation since mid-2010 following the approval of a law significantly increasing taxes on the sale of used cars. The draft law prepared by the Finance Ministry foresees that cars entering Albania for the first time will pay only the 20 percent Value Added Tax (VAT) when cleared through customs.
Since mid-2010, when a new law which increased taxes on the sale of used cars took effect, the sale of cars under legal contracts has declined as car owners began resorting to authorization or donation practices to sell their cars. The Ministry of Finance’s data show that tax on sold preowned cars dropped by 7.1 percent to 2.6 billion lek in 2010. The situation continued worsening even during the beginning of this year when revenues dropping by 22.2 percent year-on-year during the first four months of this year, stated the Finance Ministry.
In a statement issued on Monday, the Finance Ministry informed citizens not to confuse the new taxation and the fiscal pardon on cars. The ministry said that people importing or selling cars before the new law takes power next September will be taxed under the existent system.
Meanwhile, under the fiscal pardon law all people who imported cars until December 2010 but did not pay their customs obligations will have their fines and penalties pardoned if they pay 50 percent of the capital until the end of this year.
Excise taxes to be lowered
The new fiscal package which the government is approving foresees lowering excise tax for domestically produced beer to 12 lek from 30 lek currently starting from next September.
The excise tax for imported beer will also drop to 30 lek/litre down from 40 lek currently.
Two months ago, the majority approved a law which beer producers claimed it increased costs and endangered the domestic beer industry which has invested 80 million euros, mainly from loans taken by commercial banks.
The regulatory changes to the law were made after the signing of a 10-year concession contract with Switzerland’s Sicpa which earlier this year won a tender to produce and establish a tax stamps control system on tobacco, alcohol and pharmaceutical products.
The set price for excise stamps or safety codes for tobacco, spirits/wine and beer at respectively 20 euros, 32 euros and 22 euros per 1,000 stamps, without including VAT and other taxes that will be paid by the taxpaying companies, means excise will increase over 10 percent, according to representatives of chambers of commerce.
Meanwhile, the excise tax on some poor quality diesel products (Mazut and solar) will increase to 37 lek/litre the same to diesel and petrol. The customs tariffs for clothes and shoes imported from the European Union, currently at 10 percent, will be lifted. The law, expected to enter into force starting from January 1, 2012 is expected to lower clothes prices in the domestic market.
Speaking at Wednesday’s government meeting, Prime Minister Sali Berisha said the new fuel tax will be used for environment protection and the planting of fruit trees.He also announced the removal of the 10 percent customs tariff for imports by the garment and footwear industry, saying that the state budget will lose 1 billion lek to help expand the industry which produces most exports and employs thousands of people.
