Tirana Times
TIRANA, July 18 – The ruling majority deputies approved this week in Parliament a new fiscal package which lifts customs duties for cars and the garment and footwear products, lowers excise taxes for the beer industry but further increases excise rates for some low quality diesel products. The new fiscal package also introduces a new tax system for cars and increases carbon tax by 5 lek per liter starting from next September.
The bill received only the votes of the ruling coalition’s deputies while the opposition lawmakers continue their parliamentary boycott over election disputes. Although some taxes are lifted, the increase in some other excise taxes for low quality oil products and the increase in carbon tax is expected to bring extra revenues to the state budget in the last four months of this year.
The carbon tax for diesel, currently at 3 lek/liter will increase to 8 lek/liter while the carbon tax for petrol will rise to 6.5 lek/liter, up from 3 lek/liter currently.
Starting from January 2012, the carbon tax will increase by another 2 lek/liter 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.
The current annual traffic and registration taxes paid by car owners have been replaced by a new formula similar to that of import in customs procedures.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.
Meanwhile, the excise tax on some poor quality diesel products (Mazut and solar) will increase to 37 lek/literנthe same as diesel and petrol. The customs tariffs for clothes and shoes imported from the European Union, currently at 10 percent, will be lifted. The law, which is expected to enter into effect by January 1, 2012, is expected to lower clothes prices in the domestic market by 12 percent if the VAT is included.
The new fiscal package also foresees lowering excise tax for domestically produced beer to 12 lek from 30 lek currently starting from next September.
The changes approved in the final parliamentary session for this year come one week after the majority also cut the spending by 18.3 billion lek (183 million dollars) for the remaining half of this year in an effort to keeping budget deficit at 3.5 percent of the GDP and the high public debt levels at 60 percent of the GDP.
A government decision dated July 2 foresees a freeze in new hiring in the public administration and a suspension in public procurement funds after July 1, except for food and medicine purchases.
No changes to flat tax
The new fiscal package does not include changes to the 10 percent flat tax and its replacement with a progressive tax. Government withdrew from its approval last month after fierce opposition by the business community. The draft envisaged raise profit taxes for big companies up to 30 percent, changing the 10 percent flat tax system it has applied since 2008 into a progressive profit tax. Facing lower revenues, Finance Ministry sources wanted the 10 percent profit tax to remain in force only for companies with a profit rate of up to 20 percent. The profit tax for companies with profit rates from 20 to 30 percent was expected to increase to 20 percent, while companies with a profit rate of more than 30 percent would be taxed at 30 percent. A study by the Finance Ministry shows that 15 out of 100 large companies operating in Albania apply profit rates of more than 20 percent. Data show 6 of the surveyed companies had profit rates from 20 to 30 percent while 9 others applied profit rates of more than 30 percent.
