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Update3: Gov’t draft bill to increase excise duties on fuels. Transporters threaten with street protests

Excise duties on fuels will return to the level of 2016, which included an over-excise of 7 eurocents per litre, according to a draft bill amending the Tax Code.

According to Economica.net, excises will increase by 22% for gasoline and by 14% for diesel fuel, according to the new levels of the Government draft bill.

“In order to maintain competitive prices for oil products in the region, it is proposed to return, for gasoline and diesel, to the levels of excise duties applied in 2016, namely:

– unleaded petrol – RON 2,643.39/ton, respectively RON 2,035.40/1,000 litres;

– diesel fuel – RON 2,245.11/ton, respectively RON 1,897.08/1,000 litres,” the draft reads, quoted by antena3.ro.

Currently, the excise duties, following the decrease on January 1, 2017, are as follows

– Unleaded gasoline – RON 2,151/ton, respectively RON 1,656/1,000 litres.

– Diesel fuel – RON 1,796/ton, respectively RON 1,518/1,000 litres.

Thus, the state budget collected RON 6.26 billion from excise duties for energy products in H1, the Finance Ministry informs, adding that the collection of excise duties for energy products has fallen by RON 767.6 million.

The Finance Ministry representatives say the excise duty collection in H1 has fallen, in spite of higher fuel sales. They claim that the decrease of excise duties for fuel aimed to counter the phenomenon of filling the tanks in neighbouring countries, where the prices were lower. Currently, following an analysis of the excise duties level in EU Member States, it results Romania has one of the lowest levels of excises. In July 2017, the Euro-95 gasoline price was in Romania of EUR 0.997 per litre with taxes, the lowest in EU and the third lowest price for diesel fuel – EUR -.997 per litre with taxes, after Luxembourg – EUR 0.955 per litre and Bulgaria – EUR 0.961 per litre.

The draft bill reads that “Romania has the lowest price level in the EU for gasoline with taxes, however the price of gasoline without taxes is 15th in the EU, prices above other oil producing countries such as the UK and Netherlands and above countries such as Austria, Poland and Bulgaria. (…) The price decreases were counterbalanced by the fact that fuel prices without tax have increased so that the share of taxes in the fuel price is now the lowest in the EU, much below the average level at EU level.”

Asked how the Finance Ministry’s intention to reinforce the over-excise duty on fuels will influence the inflation, central bank Governor Mugur Isarescu said on Tuesday: “It will affect us, will push the inflation up! We didn’t include the raise in the inflation forecast, it was only discussed. The risk, as you’ve seen, comes mainly from the tax policy and the administrative prices.

Transporters threaten with street protests

Transporters warn that the raise of excise duties will lead to more expensive transport tickets, higher transports fees for goods, to the refuse to refuel in Romania and to protests in Victoriei Square.

According to Vasile Stefanescu, head of the Confederation of Authorized Operators and Carriers in Romania (COTAR), expensive diesel fuel, higher fees for goods transport. “We believe this is a poor joke from the government, but if it will go ahead with it, then all the employers’ associations in transportation will get united and protest.”

Eurolines owner Dragos Anastasiu says the company will refuel only abroad and will have to make the transport tickets more expensive. “We are analysing the impact of the excise duty increase and the impact. Such an abrupt change in tax policy is a defiance to the business environment, it turns upside down all the budgets and the business-plans,” Anastasiu said.

The leader of Romanian Transport Operators Federation (FORT) Augustin Hagiu recalls that the state s still owing the transporters part of the excise duty paid in the past years and believes carriers will protest again in Victoriei Square. “We will go again in Victoriei Square. Who is responsible for the fact that the money collected from excise duties was not used to build a single kilometre of highway? It’s obvious that higher excise duties will lead to higher transport fees, as 50% of the expenditures are represented by expenses on fuel,” Hagiu said.

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