Saturday, May 22, 2010

Excise Increase without Price Increase?

The current government is trying to increase tax revenues by increasing excise taxes but wants to avoid price increases

"Vice Prime Minister for Economic Affairs Serhiy Tihipko rules out rise in the prices of goods due to the increase of excise on tobacco products and alcoholic beverages. "There will be no price increase," he said."

http://www.ukrinform.ua/eng/order/?id=188185

Of course, for price inelastic goods (like for example, tobacco and alcohol), companies will try to increase their prices and hence make the consumer pay, rather than decreasing their profits

The government's solution is simple:

"Anti-Monopoly Committee issued a warning to operators on the fuel market against non-objective hikes in gas prices in connection with the expected increase in the excise tax on those products, the watchdog’s chief Oleksiy Kostesev told journalists."

http://kyivweekly.com.ua/accent/news/2010/05/19/162734.html

Again, the AMCU seems to be playing a political role rather than being an independent regulator.

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