Excise on fuel, alcohol and tobacco will remain important budget revenue in 2018
The Finance Ministry has published a draft amendment to the Tax Code for 2018, which provides for changes in excise rates for excisable goods. Businesses and business unions have failed in reintroducing the principle of VAP payment upon payment. Only alcohol producers would apply this rule. Taking into account the gradual increase in excises for motor fuel in 2018 by 10%, these costs, if introduced, would be transferred onto the consumer as a price increase. This is unlikely to have a significant impact on demand for fuel from legal entities and individuals. A further increase in excise duty on tobacco would raise domestic prices on cigarettes and gradually decrease tobacco consumption by the population. Alcohol is unlikely to increase in price due to the pressure from Russian producers and only a slight increase in excise duty. In January-May 2017, excise duty was responsible for BYN 928 million or 5.5% of budget revenues. Through a possible increase in excise duty in 2018, the state demonstrates the unwillingness to reduce its share in budget revenues.
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.