The opposition’s initiative includes lifting the VAT on bread, milk, eggs and medicines
Mimi Kodheli, a SP MP and the deputy chair of the parliamentary economy committee says the new initiative will help the majority of Albanian households striving to make ends meet by the end of the month in the face of ongoing economic crisis.
The opposition’s initiative includes lifting the 20 percent VAT on bread, milk, eggs and other basic products. The removal of the 10 percent VAT on medicines, in force since January this year, is also part of the Socialist Party’s requests to reduce the tax burden on consumers.
“Under conditions of severe economic crisis and a sharp fall in the purchasing power for each household living on wages and social assistance and not corruption, the removal of VAT on bread, milk, eggs and medicines and the reduction of VAT on other basic food products are the only way to ease the monthly burden of Albanians’ lives,” said Kodheli.
According to her, VAT and excise taxes account for 28 percent of basic food products’ final price and costs a family with average revenues half of their monthly revenues, “like nowhere else in civilized world.”
Reacting to the initiative announced by the opposition Socialist Party, the Finance Ministry, which is striving to meet its tax revenue targets even after forced mid-year budget cuts, did not welcome the opposition’s proposal.
Alfred Rushaj, the deputy Finance Minister said reforms under the Democratic Party-led government during the past six years had turned Albania into one of countries with the lowest tax burden, doubling wages and pensions.
He said the opposition was unfairly convincing Albanians that they pay excise taxes on bread, milk and eggs and added that the medicine prices had dropped by up to 10 percent since the introduction of the 10 percent VAT last January.
Eurostat
Albania’s price levels for consumer goods and services are among the lowest in Europe but remain high compared to the country’s revenues. A recent report published by Eurostat, the statistical office of the European Union, showed price levels for consumer goods and services in Albania during 2010 were at 50 percent of the EU 27 average, the second lowest in the 37 country list after neighboring Macedonia.
Food and non-alcoholic beverages are priced at 70 percent of the EU 27 average, the same as EU members Poland, and higher compared to Bulgaria, Romania, Macedonia and Serbia.
Latest Eurostat data show Albania’s GDP per capita dropped to 2,661 Euros in 2009, down from 2,784 in 2008, remaining better only compared to Kosovo which registered 1,790 Euros. Bosnia and Herzegovina, which is also benefiting from visa free travel in the Schengen area, had a GDP per capita at 3,192 Euros compared to the EU 27 average of 23,500 Euros.
