The money was supposed to go towards infrastructure investments, but one year from the enforcement of the excise duty that caused the highest overnight fuel price hike (7%), Romanian motorists are still traveling about the same roads.
“The revenue generated by (…) the EUR0.07 gas and diesel excise duty in April 1, 2014-March 31, 2015 stood at RON2,838.4, RON2,289.0 of which actual excise duty revenue and RON549.4 million VAT revenue,” the officials of the Finance Ministry replied to a question ZF asked at the end of April.
Back in November 2013, Prime Minister Victor Ponta said the money raised from the EUR0.07 excise duty per liter of fuel would go towards the Fund for major road infrastructure projects. Also at the end of that year, former Transport Minister Dan Sova said the EUR0.07 excise duty would go to the budget of the department for highway and national road infrastructure projects. The excise duty had been precisely introduced to help fund highways and national roads, he added.
Last summer, however, following the scandal surrounding the sustainability of the social security tax cut, Ponta admitted the money from the excise duty was not used for highways for but for covering the deficit of the pension budget.
The fuel excise duty was part of a set of new taxes introduced by the Ponta government, among which the special building tax and the royalty hike for resources other than oil and gas.
“The introduction of the excise duty made a negative impact on fuel consumption,” says economic analyst Laurian Lungu.
“The tax was introduced at a time when consumption was rising and even though there is no comparison base, the revenue from a higher consumption may have been higher. I am almost convinced we would have seen a rise.”
Soon after the introduction of this excise duty, fuel prices went up 7%, which put Romania among the most expensive countries in EU in this department. The move made transporters refuel abroad, and they are still doing that.
“I don’t think you’ll see a truck with a full tank of fuel leaving Romania for Hungary. It fills its tank up there,” said Radu Dinescu, general secretary of the national organization of road carriers in Romania UNTRR.
The introduction of the excise duty along with the special building tax had a negative impact on investment. Foreign investment stood at EUR2.4 billion last year, down from the EUR2.7 billion of 2013. Moreover, capital expenditures, i.e. the money the government invests in the economy fell by almost 5% to 17.1 billion in 2014.
Although the money collected from the EUR0.07 excise duty was supposed to go to an infrastructure fund, eventually it did not fund a single kilometer of highway.
“This money does not go a specific account, it goes to a huge bucket and is then allocated. We saw no highways built and investment dropped. The problem is that this was a negative message and this is the most dangerous thing. With such steps one can undermine confidence in the economy,” Laurian Lungu says.
According to available information, one kilometer of highway costs about EUR5 million to EUR6 million. The revenue collected from the excise duty should have been enough for about 125 kilometers of highway.
A total of 50 kilometers of highway were inaugurated last year, but they were 85% paid for with EU funds.
The government pledged to refund EUR0.04 of the EUR0.07 paid as excise duty to transporters every quarter. So far, however, only RON4.8 million have been given back, according to Finance Ministry data.
(English version by Loredana Fratila-Cristescu)