Additional excise duties extinguish domestic production, meaning layoffs

Planning, a systematic and strategic approach, and joint work between business representatives and authorities in finding the best solutions are the only way to effectively overcome the problems that will be beneficial for all stakeholders. Additional excise duties would destroy domestic production and are not a solution, it was stated at today's press conference at the Foreign Trade Chamber of Bosnia and Herzegovina, reports the Bosnian news agency Patria.

The Vice President of the Foreign Trade Chamber of Bosnia and Herzegovina, representatives of the Group of Non-Alcoholic Beverages and Water Producers and the Group of the Brewing Industry, as well as representatives of the Independent Union of Employees in Agriculture, Food and Tobacco Industry, Water Management, Hospitality, Tourism and Trade of BiH, appealed to the authorities and pointed out the detrimental consequences that the introduction of additional excise duties would have on domestic production and employment.

Companies gathered in these two groups employ more than five thousand workers, and it is estimated that their operations support up to 10 times more jobs in the broader economy. The introduction of the announced burdens would result in the layoff of a large number of workers.

- The groups of beer and non-alcoholic beverage producers of the FTC BiH, upon the first announcement of amendments to the Law, submitted adequate analyses with economic indicators on the impact of the Draft on the competitiveness of these two branches of the economy to all competent institutions. We believe that with the stated arguments and facts, we have proven that, in the current economic situation in BiH, the introduction of additional excise duties would ultimately have more negative than positive effects. We appeal, once again, to all competent institutions to direct their activities towards relieving the burden on the BiH economy and increasing its competitiveness, especially bearing in mind that BiH constantly records a trade deficit - emphasized Ahmet Egrlić, Vice President of the Foreign Trade Chamber of Bosnia and Herzegovina.

Additional excise duties, besides being unjustified and discriminatory, are contrary to the Reform Agenda, which aims to improve the business climate, competitiveness, and attract foreign investments by reducing burdens, and fiscal consolidation should be carried out primarily by reducing public spending and improving the collection of public revenues.

- Even at this moment, the share of excise duties and regular taxes in the price of our products is greater than the share of production costs. If additional excise duties are introduced, domestic production will suffer enormous damage in terms of reduced production, reduced number of employees, the development of a 'black market', and reduced payments to the budget based on all original excise and tax revenues. Domestic products would not be competitive compared to products from neighboring countries that have significantly lower excise duties or none at all. EU countries such as Germany, Estonia, and Bulgaria have rejected the request to introduce excise duties on these products, recognizing that the benefit for the state is too small and the risk too great - pointed out Haris Muslić, Chairman of the Group of Non-Alcoholic Beverages and Water.

Members of the Group of Beer Producers in BiH have been trying for eight months to point out the harmfulness of this proposal and are ready to get involved in creating new proposals whose implementation would ensure the sustainability of the industry and more efficient collection of budget funds.

- The brewing industry was hit with a 25 percent increase in excise duty in 2014, and this new one, together with VAT, would add 1.76 KM to the price of a crate of beer. It is certainly not necessary to increase excise duty on one product in such a short period. Such an increase in excise duty will certainly jeopardize the operations of domestic producers and cause a drop in sales of domestic beer in BiH, thereby directly reducing payments to the budget based on all original excise revenues. The proposal to increase excise duty on beer by 0.15 KM/L was devised without consultation with representatives of domestic brewers and is not part of the excise strategy in Bosnia and Herzegovina - reminded the Chairman of the Brewers Group, Edin Ibrahimpašić.

- Instead of encouraging employment, the authorities would, with this measure, eliminate existing jobs. Thousands of families would be left without income, which, along with inevitable price increases, would weaken purchasing power and threaten the standard of citizens - noted Prof. Dr. Mehmed Avdagić, President of the Union.

The members of the groups, thirty-three large domestic producers, have repeatedly appealed to the competent institutions and called for joint action, highlighting the shortcomings and consequences of introducing additional excise duties.