New tax hike to make fuel prices among highest in Europe

Government says it plans to increase the circulation tax, currently at 17 lek/litre, by another 10 lek (12 lek VAT included) which would take it to 27 lek litre (Euro 0.19).
TIRANA, Oct. 22 – Fuel prices in Albania, already among the highest in Europe, are expected to undergo a new increase next January as government is planning a new hike on the circulation tax in its 2015 fiscal package. If adopted, fuel prices in Albania would increase by another 12 lek (Euro 0.084) (VAT included) to a record of 200 lek/litre (Euro 1.4). Government says it plans to increase the circulation tax, currently at 17 lek/ litre, by another 10 lek (12 lek VAT included) which would take 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, the highest in the region and Europe despite the country having one of Europe’s lowest GDP per capita.
Reacting to news over the projected increase in the circulation tax, the Finance Ministry admitted it was discussing the increase but said no final decision had been taken yet.
The proposed increase is expected to bring speculation and a boom in imports in the next couple of months. Fuel imports boomed in December 2013 when they rose by 42 percent to around 59,390 tonnes compared to the previous month, soon after government announced that the circulation tax on fuel would increase by another 10/lek (Euro 0.07) per litre.
Erjon Bra襬 a Socialist Party MP who heads the parliamentary economy committee, has already expressed his concern over fuel prices and quality in Albania, at a time when international fuel prices have dropped by 20 percent.
Fuel import was the only key excisable item to register growth in the first eight months of this year when they grew by 6.5 percent to around 296,000 tonnes, yet remaining lower compared to the first eight months of 2010.
Data shows Albania imported around 460,000 tonnes of fuel in 2013, up 6.5 percent compared to 2012 and up only 0.5 percent compared to 2011, but down 5 percent compared to the peak imports of 484,000 tonnes in 2010
Data published by fuel-prices-europe. info show that at ALL 188 (Euro 1.354) on October 22, 2014, Albania has the highest diesel prices in the region and even higher compared to France and Luxembourg. Petrol prices at Euro 1.413 also rank Albania among the highest in Europe despite having one of the lowest GDP per capita.
Albania’s GDP per capita expressed in purchasing power standard, an artificial currency unit that eliminates price level differences between countries, was at 30 percent of the EU 28 in 2013, leaving behind only EU potential candidate Bosnia and Herzegovina with 29 percent of the EU 28 in the list.
Eurostat estimates Albania’s GDP per capita rose to 3,344 euros in 2012, up from 3,329 euros in 2011, ranking the lowest among EU candidate and potential candidate countries and at only 13 percent of the 24,600 euros of the EU- 27 average.
With an annual turnover of 800-900 million Euros, the fuel market is one of the biggest industries in the country and has a direct impact on all sectors of the economy and citizen’s welfare. Data from fuels associations show some 160 companies operate in the wholesale oil and liquid gas market and another 1,000 in the retail market, making the market fully liberalized.