Fuel excises and prices
The first increase in the excise duties on fuels has just come into force in Romania. The decision made by the leftist Government to raise this duty has been harshly criticized, in particular by transporters.
Florentin Căpitănescu, 15.09.2017, 13:39
As of Friday, the excise duty on fuels is higher by some 3.5 Eurocents per liter. Another similar increase will be operated on October 1st. The measure, aimed at bringing more money to the state budget, was taken by the leftist Government although early this year the extra excise duty of 7 Eurocents per liter had been eliminated.
In support of this latest decision, the Romanian Finance Minister Ionut Misa said that, this summer, the petrol price in Romania was the lowest in the whole of the EU and the price of diesel was the third lowest. He has also said that the decision to raise the excise fuels in two stages was taken in order to avoid a shock in terms of consumption, which would trigger price rises. However, financial analysts argue that this will certainly have a domino effect in the Romanian economy. Analyst Cristian Paun explains:
Cristian Paun: “ An increase in the extra excise duty will be reflected in prices. Fuels are related to every type of transportation and production. Therefore, when we see a product on a store’s shelf, it is clear that fuel was used to produce it and to transport it. Not to mention the customer who went to the store by car or bus to buy it. This extra duty does not but reflect the crisis the state budget is in, and the effects envisaged are short lived. Therefore, it could be seen as a solution in the short run, but in the long run it will clearly be damaging, because it will not help develop any sector of the economy.”
The National Union of Romanian Employers’ Association strongly disapproves the Government’s measure, saying that all prices of goods and services will go up, and this might even trigger a growth in the inflation rate, after a period of relative stability. The Union draws attention to the fact that many carriers will have to close their businesses and thus jobs will be lost.
The carriers’ discontent is also amplified by the fact that even before the introduction of the additional duty, the prices of fuels went up with no reason. To ease tension a little bit, Prime Minister Mihai Tudose has announced that next week the Government will hold a meeting on this very issue. Specialists believe that the growth is artificial, imposed by the big chains of gas stations in the country, and not a natural consequence of price evolution at global level.
