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.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.