EXCISE DUTIES DRAMA BROUGHT TO AN ENDED
In the days when the International Monetary Fund Mission is in Bulgaria again Parliament managed to approve on second hearing the package of taxation laws, on which the 2002 budget will rely.The draft bill for amendment and supplement of the Excise Duties Act was one of the documents on which the feelings ran high. For more than a month gas distributors, importers of coffee, and brewers, were opposing the introduction of EU excise duty rates in Bulgaria. Finally, the Parliamentary Budgetary and Finance Commission and afterwards the plenary session of MPs worked out a table with the Excise Duties Act according to the dictum pay Peter without robbing Paul.The surprise was the imposing of excise duties on wine and spirits, produced by wineries from inputs supplied by natural persons. Until now everyone could exchange grapes at the licensed enterprises against wine and rakiya (Bulgarian brandy) for own consumption without paying excise duties. However, the year 2006 is the deadline for the introduction of excise duties on home-made alcoholic drinks. On the other hand, the excise duty labels on wine shall be revoked as of next year. The excise duty on wine is expected to be lifted by 2003, as it is not levied in the EU. The parliamentary majority made efforts to ensure a more healthier way of life to the Bulgarians by raising the excise duties on cigarettes and coffee, which would result in hiking the prices of these commodities. Thus, as of January 1, 2002 the excise duty on all types of baked coffee shall be BGL1.3/kg. The same rate will apply to all powder blends, which contain coffee extract of more than 10 per cent. The import of raw coffee will be taxed by BGL1/kg.The excise duty on cigarettes will go up by 10% (from 30% to 40% of the sales price). This will increase the retail prices of the most popular cigarette brands by more than BGL0.20 per box. Deputy Minister of Finance Atanas Katsarchev knows very well that traders will now report ficticious sales of cigarettes, which will be in fact sold next year at higher prices. The treasury's losses from this (already known) trick are pre-estimated at about BGL5MN.The excise duty on beer caused the least of debates. As of the beginning of 2002 BGL1.05/hectolitre will be charged on beer.Gas distributors and taxi drivers can be glad that Parliament approved excise duty of BGL120 per tonne of propane-butane instead of the initially projected BGL180/tonne.However, the cabinet suceeded to vote its proposal for sticking excise duty labels on bottled spirits and cigarettes, intended for export. The labels will certify that excise duties have been paid even when the goods are sold in duty-free shops. The fine for sale or keeping of such commodities (when the offense is committeed for the first time) will amount to the double size of the excise duty, but not less than BGL1,000.Under the Amendments to the Excise Duties Act the Bulgarian tax and customs administration will be allowed to use foreign customs data for determining the size of the owed sums and this information will be considered as evidence during court procedures. Deputy Minister of Finance Atanas Katsarchev explained that this provision was aimed to prevent the payment of lower excise duties on goods imported into the country, resulting from declaring lower prices of the imported commodities.Thus, the excise duties drama, which lasted for more than a month, was brought to an end. This, however, does not unambiguously answer the question if the new taxes would result in a higher collectibility of revenues into the Treasury.