Experts say that state will not lose a lot from fuel price reduction

Very few countries in the world can influence the global crude oil prices, but all have a mechanism to ease the price oscillations through tax (excise) policy.

One option is for the state to temporarily reduce excise taxes, and some experts suggest that the excise policy should changes in a way that the state imposes excise on those energy products that are currently excise-free and reduce the existing excise on other energy products.

In case of drastic market disturbances, which currently going all in all countries of the region, not only in Serbia, all eyes are turned to the state.

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 In our country, 95- octane petrol currently retails for 155.90 dinars per litre, Eurodiesel for 165 dinars, and higher quality fuel, such as “extra” Eurodiesel costs 170.40 dinars per litre. The state excise on diesel is 53.2% of the price, while in the case of petrol, it is 54.5%. Reducing excise is the fastest and most effective way for the state to reduce its price share.

This possibility has recently been announced by the Energy Minister, Aleksandar Antic, who said that the Government will monitor the situation in the global oil market and if the prices go up there, they will consider what measures are available to keep the fuel prices in Serbia stable.

The last time the excise in Serbia was reduced was in 2012. However, experts claim that lower excise does not necessarily mean that the state would lose budget revenue.

“When the price of fuel is falling, the fuel sales drop 10%”, Dragan Skrnjic from EKO-Club Serbia says and adds that “this also means less budget revenue for the state”.

The rough calculations show that if, for instance a litre of diesel costs 160 dinars, with the excise of 85 dinars, if the state reduce the excise by only five dinars, how much will (plus VAT) cheaper fuel, the state would “lose” 5,000 dinars per tonne of fuel . And if the fuel sales drop by only 10%, that would translate into 8,600 dinars per tonne of fuel less for the state budget.

It is clear that price increases affect the prices of other goods and commodities too like agricultural products, but with the higher prices comes a decline in the sales and state revenues generated from the excise.

Experts also say that reducing prices should not be the only solution. Thus, Petrol’s experts consider that one of the ways to alleviate the situation is the redistribution of the excise, as well as using alternative fuels more.

“Although Serbia has always been one of the most developed auto-gas markets in Europe, after imposing high excise of 400 euros per tonne (Slovenia 120 euros, Croatia 140 euros), the consumption began to decline, and since the introduction of excises, this market has been reduced by about 30 percent”, Bojan Kocic, director of Petrol, says and adds: “It is interesting to note that CNG (methane), which has the same legal status as LPG, is not subject to excise at all. Similarly, the same goes for LNG (natural gas and hydrogen), whereas the symbolic excise is applied to electricity.”

Kocic thinks that it would be fair to transfer a part of the excise from the LPG to the CNG and thus all energy products, that are defined as pure fuels in accordance with the European directive, should have an equal market treatment.

By switching to environmentally-friendly fuel, the consequences of the state budget would be neutral, but citizens would be able to cover the same amount of kilometres at 50% of the fuel price.


AFTER the big surge, the price of a barrel of crude oil has stopped growing and even began to decline slightly with the current price standing at about $75 a barrel.

“It takes some time to sell the stock purchased at higher prices”, explains Bora Tatic, deputy chairman of the Association of Private Gas Pumps of Serbia. “The dollar / euro exchange rate should also be closely monitored, as it also affects the final price. The average retail price of fuel has been growing since the beginning of the year with the increase amounting to 6.1% (petrol) and 7.5% (diesel). In dinars, the increase is 8.79 for petrol and RSD 11.30 for diesel.

(Vecernje Novosti, 08.06.2018)

This post is also available in: Italiano

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