CUSTOMS STRIKE BACK
DOMESTIC EXCISE GOODS WAREHOUSES TO BE ORGANIZED AFTER FRENCH MODELThe always topical issue of the results of customs' operation gave an occasion for the former and current management of the Customs Agency to cross swords on the media front. When presenting his new book a week ago the ex-director of the Customs Agency Emil Dimitrov said that the record high proceeds from customs duties, VAT, and import excise duties, reported by the team of the incumbent head of the agency Assen Assenov, were primarily due to the hike of fuels on international markets and the increased volume of imports into Bulgaria. The managers of the Customs Agency did not waste time and hurried to reply Mr. Dimitrov's attacks. At a special press conference on Tuesday (December 14) Mr. Assenov and his three deputies presented to representatives of mass media a detailed financial analysis about the customs' proceeds into the budget for the first eleven months of the year. The agency usually reports to journalists in the beginning of each calendar year. But as Mr. Assenov himself admitted indirectly, this time they hurried because of recent accusations in the press. Indeed, there are some figures in the Customs Agency's analysis which deserve attention. According to the report, prepared by the customs statistics department, November revenues from customs duties, VAT and import excise duties, totalled BGN411. 855MN. The amount is BGN128.386MN up from the same month of 2003. In January - November the customs' revenues to the budget totalled BGN3.7BN. Thus, they practically fulfilled the plan, set to them by Finance Minister Milen Velchev in the beginning of 2004. This is BGN815.113MN up (28.3% growth) from the same period of last year, when BGN2.875BN was collected. The Customs Agency projects that its revenues to the budget will amount to BGN4BN by the year-end. If that happens the increase for the entire year will be about 25-28 per cent. Is this much or little and is this growth a result of the customs' improved operation or is it due to external factors? According to Mr. Assenov, statistics about the volume of imports and customs' proceeds for the first eleven months is indicative in itself. For instance, imports increased by 20.2% within that period, and revenues collected by the customs rose by 28.3 per cent. He also noted we should bear in mind the adverse effect of the US dollar's depreciation on international financial markets on the revenue side of the budget. It is known that US dollar imports into Bulgaria account for about 33% of all. In the words of Mr. Assenov, one of the factors for reporting such a growth is the increased declared value of imported goods on the basis of which customs duties are calculated. According to customs' data, due to the fact that traders have started writing in their declarations higher customs value, proceeds into the budget rose by BGN268MN from 2003. However, it is not clear if the reason for that is the tightened customs control at Bulgaria's borders or if it is due to the inflationary pressure as a result of the higher prices of fuels on international markets. Calculations of the Customs Agency show that the price hike of oil increased proceeds from VAT alone, at that to the modest amount of BGN45MN, which is 6.6% of the total growth of revenues. The most objective indicator of the customs officers' zeal is the so-called net growth which does not calculate customs receipts resulting from higher volume of imports and the price increase of goods. Net growth according to customs experts is about 14 per cent. But this is way down from what the consultants from Crown Agents have promised - to raise almost two-fold customs' revenues as in Lithuania in the end 1990s. However, the British agents will soon be able to boast with the launching of five new mobile groups for control. Let's recall that ten mobile teams were set up under the first contract between the Finance Ministry and Crown Agents, signed in November 2001. The number of mobile teams had to go up from ten to fifteen by the enforcement of the second contract in the beginning of August 2004. It seems it will happen, although half a year after the agreement was signed. As the BANKER weekly already wrote, the lack of candidates from the Customs Agency's employees to work in the mobile groups turned out to be a serious problem. This week , however, Finance Minister Velchev and Interior Minister Georgi Petkanov signed an ordinance, regulating the operation of the future five teams. One of the novelties is that officials from the tax administration will be employed in them in the future. Each of the first ten mobile groups consisted of two customs officers, a representative of the National Service for Combating Organized Crime, and a consultant from crown Agents. Meanwhile, its became clear that the project for the so-called excise goods warehouses will be set in motion in the beginning of next year. Bulgaria has undertaken a commitment to the European Union that as of January 2006 at the latest the excise duty, collected for deals effected in the interior, shall be transferred from the tax authorities to the customs. Currently, they calculate and collect that indirect tax only when goods are imported into the country. But in order to realize that change, the National Assembly should pass before that an entirely new law on excise duties, to supersede the effective legislative act, amended this week. According to information of the Finance Ministry, a draft bill on excise duties has been included in the Council of Ministers agenda and will be discussed at one of its first meetings after New Year. It is already known that the system of excise goods warehouses in Bulgaria will be introduced with the help of the French customs administration. This will be effected within the framework of the twinning project (fulfilled jointly with the administrations of a EU candidate and a EU member country) under the EU's PHARE programme. Bulgaria is expected to be granted EUR1.1MN from the European Commission for the project and EUR800,000 will be utilized under another twinning project. The latter will train the customs officers to apply the principles of the Common Agricultural Policy of the EU after 2007 and will be realized together with the British customs administration. Bulgaria will get a total of EUR18.2MN from the EU for the reform in customs over the next two years. With all that generosity on the part of Brussels it's strange why BGN30MN had to be paid additionally for attracting private consultants.