Truths and lies about excise taxes and tolls: How fuel prices influenced food prices in recent years

After meeting with the members of the Council of Ministers of BiH, members of the BiH Presidency and political party leaders, the European Commissioner for Neighborhood Affairs and Enlargement Policy, Johannes Hahn, today announced the position of the BH Commission. authorities should adopt amendments to a set of laws relating to excise duties and tolls.

- This is one of the decisions that this country has adopted as one of the ways to finance the further construction of the highway network in BiH. I do not think I have to explain and emphasize how much infrastructure is important for the development of the economy of any country in the world. Basically it all comes down to implementation. Keep doing what you started. The purpose of everything is the interests of citizens, "Hahn said after the meeting.

Employment and road construction

It is the point of the whole story about the amendments to the Law on excise taxes in the last sentence. However paradoxical it sounds, but these changes, which affect the price of fuel, should contribute to a better standard of living for all people in BiH.

First of all, these amendments provide for the repayment of loans from the European Bank for Reconstruction and Development (EBRD) and other financial institutions that are intended for direct road construction. By securing this money, the basic precondition for a strong momentum in the field of road construction is fulfilled. This will provide a job for several thousand workers who will be engaged directly in construction, from engineers who will design roads and monitor their construction, to construction workers who will perform the works.

What is not to be distracted by the mind is that construction works of this type for every person directly involved in works on the construction site provide jobs for another seven to ten people in the accompanying industrial branches. Namely, the construction of a road requires a stone, that is, gravel, cement, asphalt, iron for reinforcement, fences ... This should be added to the industry of non-construction materials, such as fuel, spare parts for machines, protective clothing and footwear, food. .., so it's easy to conclude that launching large infrastructure projects hires or secures jobs for tens of thousands of people. This also means secured existence for their families, which ultimately gives the number of people who have direct financial benefit from the construction of highways and roads that are measured by hundreds of thousands.

In addition, by adopting amendments to the Law on Excise, the credit arrangement with the IMF is unblocked and prerequisites are created for obtaining a new tranche of this favorable loan, which serves as a support to the process of overall reforms in BiH. This money will be financed by the creation, but also the implementation of numerous laws that should contribute to creating better living conditions for all inhabitants of BiH.

Counter-arguments and spins

The most frequently mentioned counter-argument of those who oppose these changes is that they will lead to fuel prices, which will result in a chain reaction to the increase in prices for all other products. However, given that the principle of free pricing in BiH is in force, only fuel does not have to significantly affect final prices of consumer goods. This, above all, depends on the will and the commitment of traders.

As an illustration, data on the movement of prices of fuel and food products can be used in the period from 2012 to 2014. In 2012, the targeted diesel fuel increased to 2.60 KM per liter. At that time, the price of kilograms of bread amounted to 2.47 KM, kilograms of flour 1.17 KM, liter of milk cost 1.49 KM, and 250 grams of butter cost 3.99 KM.

During 2013, the price of diesel fuel was falling and ranged between 2.50 and 2.35 KM per liter. However, only a slight fall in the price of basic food products has been recorded, and some have even increased. Thus, the price of a liter of milk "jumped" for one fening, and for 250 grams of butter, it had to be as much as 46 fening and it cost 4,45 KM. The bread was slightly lowered, to 2.40 KM per kilogram, and the flour was cheaper 17 fening and cost one mark per kilogram.

In 2014, fuel prices continued to "fall" by as much as 60 fening per liter. Millers used this drop and lowered the price of flour at 90 fening per kilogram. However, all this did not prevent bakers to raise the price of bread again to 2.45 KM per kilogram. The price of milk remained the same, ie 1.50 KM per liter, but in spite of this the price of butter increased to 4.50 KM for 250 grams.

From these statistics, it is clearly noticed that the increase in fuel prices can only serve as an excuse, but not as an argumentative reason for the rise in prices. This is primarily influenced by the market or customers. After all, it has become a regular practice for citizens to regularly keep track of the catalogs on the action offer in the shopping chains, so when shopping there are several shopping centers and in each of them they buy something to save as much money as possible. It is this kind of customer behavior that will influence the formation of prices more than changing the Law on Excise.

A similar principle can be applied at the same fuel prices. When prices rise on world stock exchanges, domestic distributors use this opportunity to raise prices on pumps. However, when prices on the world stock exchanges begin to fall, then arguments like the US dollar exchange rate against the euro, ie KM, prices in refineries, transportation costs ... are extracted, so that cheaper prices are insignificant and it takes much more time to fuel cheaper, but to get more expensive. This means that distributors are likely to have enough space at their current prices to take on the increase in tolls, and retaining low prices in an open market game attract customers.

Media reports of previous years clearly indicate that fuel prices do not have a major impact on food prices

The money goes exclusively for road construction

Another argument used by the opponents of this law is that money will rise to the budget from fuel price increases and will not be used for road construction. The new proposal of the Council of Ministers, which is sent to the parliamentary procedure, also rejects this argument.

This proposal envisages an increase in tolls, and not excise for 15 fening per liter of fuel. Currently, two types of tolls are being charged for buying fuel in BiH. It from 15 fening per liter is intended for the construction of highways, and the one from 10 fening for the construction and maintenance of other roads. Toll money is not paid into the budgets of the state, entities and cantons, but directly to the accounts of public companies Autoceste FBiH, Autoputevi RS, Ceste FBiH and Putevi RS.

So will be with the money from the increase foreseen by the new amendments to the Law on Excise. It envisages an increase in toll from 15 fening to 25, and those from 10 to 15 fening. All this money will go directly to the mentioned companies.

As for excise duties, a new proposal for changes envisages an increase in fuel oil for 15 fening per liter, and the introduction of excise taxes on biofuel and biodiversity of 30 fening per liter. Excavations of the most used types of fuel, diesel and various petrol, will remain the same.

Now, when the amendments to the Law on Excise Taxes have been cleared by the opponents, and the last trump card is expected to support these changes.

• 4 Dec, 2017
• 1258 views