The government’s recent efforts to cap fuel prices have helped avoid protests by freight forwarders. However, lowering the rate of excise duties is only a temporary solution against rising oil prices.
Two weeks ago market leader oil and gas company MOL Rt. increased the price of unleaded 95-octane petrol to HUF 254.5 per litre. Last Sunday, the price of the fuel fell two forints per litre, thanks to the government’s cut on excise duties. According to an amendment to the excise tax law, if the average price of unleaded 95-octane petrol exceeds HUF 250 per litre on two consecutive Mondays, the excise tax will be cut 0.8% for each 1 forint increase. Before Parliament voted on the amendment, senior opposition party Fidesz–MPSZ proposed a 20% cut of excise duties. “We cannot demonstrate against world market prices,” said Pál Horváth, chairman of the National Democratic Association of Freight Forwarders. He added that a two-forint cut will not solve transport companies’ problems on the long run.
In fact, taxes should be reduced more drastically and MOL should be restrained when setting its list prices. Interest protection groups are much quieter these days than in 1991, during the street demonstrations called “the taxi blockade,” or in 2000, when the government, under pressure from freight companies, limited the rate of excise duty on some oil products. In July 2002, the government raised the excise tax on oil products by 11%. As a result, the amount of excise duty on diesel and unleaded 95-octane petrol grew to HUF 85 and HUF 103.5 per litre, respectively. These figure exceed the bare minimum set by the EU by as much as HUF 12. “Most EU member states levy value added tax (VAT) on the price of the fuel that does not include the value of the excise duty,” said István Galambos, co-chairman of the Association of Hungarian Freight Forwarders, “and the Hungarian government should do the same in the present circumstances.” Several interest groups say that MOL makes a high profit by selling fuel that is imported through pipelines offering much cheaper supplies than the current record-high oil prices.
However, according to investigations by the Competition Office, MOL did not abuse its dominant position between 1997 and 2000. Despite lower fuel prices in neighbouring countries, MOL seems to apply realistic prices. Calculating without taxes, producer fuel prices in neighbouring countries such as Slovakia, Austria and Croatia are the same as Hungarian ones. High fuel prices in Hungary are triggered by the extreme amounts of taxes. On 24th May, 95-octane petrol cost HUF 295.5 per litre in Germany, HUF 238 in Austria, HUF 235 in Croatia and HUF 220 in Slovakia. Hypermarket operator Tesco Global Stores Rt. chose this turbulent period to launch its chain of discount petrol stations in Hungary. It has recently opened two stations, which sell the same type of petrol for HUF 241 per litre. Tesco plans to open seven or eight similar stations until the end of the year.
Source: HVG
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04.06.2004