Excise taxes in January 2014 suffered a sharp decline of 35.4 percent after a sharp increase of 66 percent in December 2013 ahead of tax hikes on fuel and tobacco
TIRANA, Feb. 24 – After a record 26 percent increase in December 2013 when imports of fuel and tobacco boomed ahead of the tax hikes, government revenues shrank in January 2014 affected by double digit drops in excise taxes and profit tax.
Finance Ministry data show government collected around 27.3 billion lek (Euro 190 million), down 1.4 percent (Euro 2.7 million) compared to January 2013 but 2.2 percent more than it targeted.
VAT, which is applied at a fixed 20 percent rate on almost every product and service and indirectly measures consumption, grew by 13.8 percent year-on-year in January 2014, unveiling signs of recovery in the Albanian economy which after the shrink in the third quarter of 2013 is struggling to maintain positive growth rates.
Excise taxes in January 2014 suffered a sharp decline of 35.4 percent after a sharp increase of 66 percent in December 2013 ahead of tax hikes on fuel and tobacco.
The government budget balance in January 2014 registered a surplus of 2.3 billion lek (Euro 16.2 million) compared to a deficit of 215 million lek (Euro 1.5 million) in January 2013.
The situation was a result of government spending in January 2014 dropped by 10.5 while public investments dropped by 82 percent.
Positive performance in December 2013, when imports of fuel and tobacco boomed ahead of tax hikes, helped the country’s public finances considerably recover although they could not escape a slight negative growth for the second year in row, a situation unprecedented in the past 16 years. Finance Ministry data show total government revenue in 2013 declined by 0.5 percent year-on-year on sluggish consumption and private investments, indirectly unveiled through the performance of VAT and imports of machinery and equipment.
Affected by underperforming government revenue and soaring spending in the first half of 2013 ahead of the June general elections, the budget deficit rose by a record 43 percent to 65.4 billion lek (around Euro 457 million) reaching around 6 percent of the GDP, double compared to the average in previous years.
Government revenue dropped by 0.03 percent in 2012, registering the first decline since the collapse of the notorious pyramid investment schemes in 1997 after growth rates of 1.8 percent in 2011, 8.6 percent in 2010 and 2.7 percent in 2009.
VAT dropped by 3.1 percent in 2013, unveiling the difficult situation the Albanian economy is facing as the expected growth rate for 2013 has been reduced to only 0.6 percent after a 2.3 percent shrink in the third quarter of the year.
The deficit in the pension scheme for 2013 rose to around 44.5 billion lek billion lek (Euro 311 million), up from around 40 billion lek in 2012, unveiling the need for an emergency reform in the pension system which suffers poor collection rates due to widespread informality, according to Finance Ministry data.
