Important Facts to know: What are Truths and Lies about Excise Duties

May 11, 2017 9:15 AM

worksOpponents of the adoption of amendments to the Law on Excise Duties, which include an increase in excises by 15 fenings per liter of fuel, keep forgetting one very important thing. With the adoption of these amendments, about 3 billion BAM of a loan under very favorable terms would be released to BiH, which will be intended for the construction of new and reconstruction of existing roads in our country.

Instead of that, they keep noting that the increase in excise duties would lead to an increase in fuel prices which, according to them, should further lead to a chain reaction of price increases of all other products and services as well. This, as they keep repeating, would further jeopardize the already low standard of living of citizens of BiH.

However, the reality is a lot different. First, the increase in excise taxes by 15 fenings per liter of fuel should not automatically lead to an increase in the prices of fuel. According to experts, there is enough space in the current fuel prices for distributors of fuel to take part of the increase as their burden. In the market competition for consumers, distributors do not have to increase prices of fuel by 15 fenings per liter, but the increase can be a lot smaller.

Another thing is that, even in the case of an increase in prices of fuel by 15 fenings per liter, the prices will still be the lowest in the region.

After all, the increase in prices of fuel does not necessarily mean an automatic increase in the prices of other products and services as well. For the sake of illustration, the prices of fuel varied up to 25 % in recent years. Thus, diesel went from 2.4 BAM per liter to 1.79 BAM in the past 3 years. Prices of products and services remained either the same or increased in a certain ratio. This means that fuel prices do not represent a key factor when it comes to determination of prices for other products and services.

Opponents of excise duties also often forget to mention that these loans will lead to increase of employment of citizens in BiH and thus a large number of citizens would stabilize their existential situation, as they would finally start receiving regular salaries and their working hours would be on workplaces, rather than on protests.

For example, within the previous investment cycle of construction of the highway on Corridor 5C, about 5,000 workers were directly involved on the construction of a little more than 40 kilometers of roads.

We should also be aware of the fact that, according to international standards, each new workplace in the field of construction require the employment of 8 to 10 workers in supporting industries, due to the fact that someone has to prepare and produce stone, cement, pipes, asphalt, and even food, which are spent or used on construction sites.



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