ECONOMY Hadžić: I propose two simultaneous measures to slow down the rise in oil prices

SARAJEVO, (Patria) - Fuel prices continue to rise in our country as well. At the beginning of March this year, I warned that we must slow down the rise in fuel prices, through lower tax burdens, because in this way we will slow down the chain reaction of rising prices of other products, states economist Faruk Hadžić in his commentary.

"I also warned that the longer we wait, the more painful and difficult it will be to help citizens and the economy. In the Sarajevo Canton, the lowest price of gasoline is 3.31 KM per liter today, and diesel is 3.41 KM, although it might be found cheaper somewhere if it's an old stock. Today I will come out with a new proposal on how to influence a significant reduction in fuel prices in BiH. There are two simultaneous measures. The first measure is to urgently and without delay temporarily suspend excise duties on fuel. This is such an urgent measure that no excuses from decision-makers are possible. This reduces the price of a liter of fuel by between 0.30 and 0.40 KM, depending on the type of fuel," says Hadžić.

According to him, the second measure involves calculating VAT not on the current value of a liter of fuel, but on the retail price of 2.01 KM, which was the price a year ago.

"At a price of 2.01 KM, the state collects 0.29 KM of VAT per liter of fuel, while at a price of 3.31 KM, it collects 0.48 KM. Therefore, solely due to the higher fuel price, the state earns an extra 0.19 KM of VAT per liter of gasoline. The goal of this measure is only for the state to collect the same amount of VAT as it did before the price increase, not to earn extra due to the inflationary crisis. Thus, if this measure were adopted, the price of a liter of fuel would immediately be lower by 0.54 KM per liter of gasoline, or 2.77 KM. A similar reduction could be expected per liter of diesel," explained Hadić.

He adds that the state would not have any loss or reduction in indirect tax revenue.

"Based on excise duties, the reduction in revenue over six months would be around 250 million KM. However, data from the Indirect Taxation Authority of BiH shows that indirect tax revenues in the first five months of 2022 are higher by 739 million KM or 23.88% compared to the same period in 2021. Even with the reduction of excise duties, they are already almost 500 million KM in surplus, and they still have seven months to collect. Citizens and the economy must be helped, and this is the best way to be fair to everyone. The argument that only the rich will benefit from the reduction in fuel prices, because the poor do not drive cars, is very unserious and not worth commenting on at all. Just try to ban the registration of cars with EUR 1 and 2 standards, and you will see how many "rich" people drive cars in our country," concluded Hadžić.