Food price cuts? Albanians will pay an additional 110 million euros in "hidden" taxes

The government will likely vigorously promote the reduction in VAT on basic foods as a significant relief measure for Albanian citizens. But the truth is that the new fiscal package increases the tax burden, which citizens will pay by a full 110 million euros per year.

This is the net financial effect revealed by the official reports of the new Fiscal Package, which Edi Rama's government and the Minister of Finance, Petrit Malaj, launched to businesses in complete secrecy last night at 10:00 PM, just three days after they had promised the Tax Council that there would be no tax changes.

The sweetness of the VAT reduction for food is almost offset only by the increase in the statutory rate of this tax to 21 percent, for all other products and services.

But other measures, halving the VAT threshold for businesses, increasing the profit tax to 17 percent, doubling the dividend, increasing the VAT for tourism, not only completely eliminate the food relief, but also lead to the net effect of the fiscal package increasing the burden by 110 million euros.

Where will the 110 million euros come from?

According to calculations based on official reports from the Ministry of Finance, the new fiscal cleanup is divided into two main pillars. First, in the area of ​​income tax, the state secures an additional 77.4 million euros (7.03 billion lekë).

This influx comes from the increase in corporate profit tax to 17%, which takes 55 million euros (5 billion lek) from companies, as well as from the almost doubling of the dividend tax to 15%, which will extort another 33.5 million euros (3.04 billion lek).

Meanwhile, the TAP reform brings a net administrative cost of 11.1 million euros (1.01 billion lekë), as the relief for the middle class is significantly mitigated by the new 32% tax on high salaries.

Secondly, changes to the VAT scheme and halving the threshold for small businesses bring a positive net effect of 32.1 million euros (2.91 billion lekë).

The increase in the standard VAT to 21% will make most goods and services more expensive, adding a full 116.7 million euros (10.6 billion lek) to the budget. In parallel, the blow to tourism and agritourism through the increase in VAT to 10% will take 6.7 million euros (614 million lek).

The heaviest blow is dealt to small businesses, where the halving of the threshold from 10 to 5 million lekë forces 17,516 businesses into the scheme, at a cost of 49.5 million euros (4.5 billion lekë).

This entire wave of price increases fully compensates and easily covers the loss of 141 million euros (12.8 billion lek) that the reduction of the VAT on the basic basket to 6% costs the state coffers. ( Kapitali.al)

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