One of Serbia’s announced measures from the fiscal consolidation set prepared by the government is severe battle against black economy. The necessity of applying such a measure is best confirmed by the fact that Serbia loses some EUR 200 million due to illegal traffic in tobacco, which constitutes almost one-third of the announced savings.
Excise tax incomes represent an important budget segment and the this year’s fiscal strategy has envisaged that they total RSD 227 billion. However, they will amount fo RSD 216 billion eventually. While charges have risen when it comes to oil derivative excise taxes, a drop from 99 to 79 billion dinars has been recorded in the tobacco field, which is why the budget will be deprived by some EUR 200 million and that will need to be made up for with savings on expenditures. Experts attribute this to a rise in illegal traffic in those excise products. Towards the end of 2012, tobacco excise taxes rose twice, which directed part of the production and trade towards illegal operations. As competent authorities failed to react adequately, tobacco trafficking developed and assumed large dimensions. However, this problem is widespread in the whole region, not only in Serbia. The black market of tobacco int eh Western Balkans is said to deprive the regional states’ respective budget incomes of almost EUR 2 billion.
The Tax Administration is announcing a severe battle against black economy and special measures aimed at combatting the illegal tobacco market. Deputy Director Marko Marinković stresses that a comprehensive action of several state authorities is required. That means that the Tax Administration should harmonize its activities with the Customs Administration, the Interior Ministry and the Prosecution. As for illegal traffic in tobacco, he says that there were some groups whose activities have elements of organized crime that are active in that field.
At the regional level, Serbia’s tobacco excise taxes are around the average. Macedonia and Albania have lower ones, while BIH, Montenegro and Croatia have higher. That confirms that fact that the problem does not lie in the state’s excise polucy, but in the implementation of laws and the lack of strong control in production and trade. Due to illegal traffic in tobacco, the local tobacco industry, in which considerable foreign investments have been made, has dropped by some 25% in the past two years. It is not know if anyone has accounted for illegal traffic in tobacco in Serbia in that period, which shows that the state is acting two slowly. Tobacco product manufacturers expect the announced battle against the black economy to produce results in that field. For instance, Croatia, which has higher excise taxes than Serbia, has drastically reduced illegal traffic in tobacco by introducing strick controls and by applying Draconian penalties.
In the EU, there is a harmonized excise tax policy structure-wise, i.e. in terms of defining such products and the calculation methods, whereas each member-state is in charge of the amount of the rate to be applied. Excise incomes participate with some 10% in the national budget. For the time being, Serbia is not obliged to harmonize its excise taxes with the EU, but Brussels has recommended the candidate countries to harmonize them with the lowest rates.
Source; Radio Serbia
