Forces aimed at counteracting lobbyists could lead to conflicts with Ukrainian ones.
The main tax reformer of Ukraine, Daniil Getmantsev, announced a significant increase in the excise tax on autogas . On the one hand, this will bring additional revenue to the budget, on the other hand, it will hit the pockets of many Ukrainians. “Apostrophe” found out how much gas will rise in price at gas stations in the event of a threefold increase in the excise tax on it, as well as how this will affect the fuel market in our country as a whole.
In Ukraine, the excise tax on liquefied automobile gas may more than triple in the near future. This was announced by the head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Daniil Getmantsev.
According to him, increasing the excise tax on autogas is a prospect for several months.
“The only argument why the gas excise tax was low before is that once there were stronger lobbyists in the LPG market (liquefied petroleum gas, used, in particular, as automobile fuel - “Apostrophe”) than in the market gasoline. The ratio should be in energy intensity. If we apply this logic with a gasoline rate of 213 euros per thousand liters, the gas rate should be 160-170 euros. This is European practice ,” Getmantsev said.
Let us remind you that from July 1, 2023, taxes on fuel in Ukraine were returned to the pre-war level. VAT on all types of fuel increased from 7% to 20%, the excise tax on gasoline increased from 100 euros to 213.5 euros per 1 thousand liters, on diesel - from 100 euros to 139 euros per 1 thousand liters. At the same time, the excise tax on autogas from September 2022 remains at the level of 52 euros per 1 thousand liters.
Wartime logic
Why the idea to increase the excise tax came up is, in principle, understandable.
“They do all this according to the laws of wartime - they are looking for opportunities, reserves wherever possible, how to fill the budget, ” said Sergei Kuyun, director of the A-95 consulting group, in a conversation with Apostrophe. “ According to our calculations, this initiative will bring in about a billion hryvnia a month .
The logic here is completely clear. After all, as you know, budget funds that our state receives in the form of income, including through taxes, are allocated to defense.
However, some government decisions in this area may not be particularly successful. These seem to include the intention to raise the excise tax on autogas.
According to the consensus estimate, increasing the excise tax on gas to the levels voiced by Daniil Getmantsev will lead to an increase in retail prices for it by at least 4 hryvnia per liter.
“Such a rise in price will immediately lead to an increase in prices for transport services in the mass segment - taxi services, transportation for small businesses, etc. Also, this initiative will hit the poor, because prime-segment foreign cars can rarely be found running on gas ,” said Vitaly Shapran, an economist and former member of the Council of the National Bank of Ukraine, in a commentary to the publication.
He recalled that this is not the first initiative of Getmantsev, which increases tax pressure and affects broad sections of the population.
“At the same time, the situation with non-tax revenues of the state budget is catastrophic. In 2024, instead of the promised 100 billion hryvnia, the NBU will transfer just under 18 billion due to strict monetary policy. For the same reason, the Ministry of Finance is forced to borrow through government bonds at high interest rates, and these are expenses of the state budget,” says Shapran. “ That is, at those levels where it was possible to fill the budget without reaching into the pocket of an ordinary Ukrainian, Getmantsev’s committee avoids activity. It seems that for Getmantsev the main task is not filling the budget, but irritating voters .
In addition, with regard to the European policy of establishing excise taxes on fuel, Daniil Getmantsev, to put it mildly, is wrong.
According to Naftorinka expert Alexander Sirenko, in Ukraine the ratio of the excise tax on autogas to the excise tax on gasoline is the average for Europe.
“Currently the ratio of excise tax on gas to excise tax on gasoline is about 25%. And, if we do as Getmantsev said, in this diagram, in terms of proportion, we will immediately be placed in first place. If sooner or later we have to follow the logic of the European Union, they will tell us no more than 20%, but we will have about 70% ,” the expert said in a comment to Apostrophe.
If you carefully study the table, it will become obvious that excise tax rates on both autogas and gasoline in Ukraine are lower than in many EU countries. At the same time, the excise tax on gasoline is higher than in Ukraine in all EU countries. In connection with this, I would like to ask – are you going to raise it too?
More expensive, but cheaper
As mentioned above, an increase in the excise tax on liquefied gas will lead to its price increase by 4 hryvnia, or even by all 5 hryvnia per liter.
However, it is quite possible that Ukrainians will not particularly feel this rise in price.
“Today's price for liquefied gas is biased. Today it should be 27 hryvnia per liter, that is, 50% of the price of A-95 gasoline, ” says Sergei Kuyun. – About 4 hryvnia per liter will be added to it (after increasing the excise tax). And thus the price will be even lower than today. It will be 31-32 hryvnia, but not 35-36 (as it is now) .
Recently, and especially in November, autogas in Ukraine has become more expensive, while prices for gasoline and diesel fuel remained stable and even fell slightly.
There are explanations for this: firstly, the government finally cut off the Russian resource, which, under the guise of a European one, was entering the Ukrainian market, and secondly, some gas shortage arose due to the blockade of the border with Poland by carriers.
Now both of these problems have been solved, and since the end of November, autogas has not become more expensive (and has been getting cheaper for the last few days).
“There will be no shortage of autogas. The market has already found alternative sources, alternative routes. This gas just has to get there ,” explained Sergei Kuyun.
And, apparently, he is already arriving. At least, prices for it in wholesale are falling, and quite significantly. According to Alexander Sirenko, at the last gas auction the collapse was 14%.
In retail, the price reduction is not so noticeable yet. At the same time, it is possible that market operators will try to “soften” this trend.
However, in any case, signs of market stabilization are obvious.
And here again one cannot help but recall Daniil Getmantsev’s initiative to increase the excise tax.
“I would like to ask the question directly: What do you want? Kill the gas market? Why bother all this now, I honestly don’t know ,” says Sirenko.
In connection with a possible increase in gas prices, the question arises of how the gasoline market will behave - will the demand for it and, accordingly, its cost increase?
“Even with the announced rates, gas will remain attractive to drivers, ” Sergei Kuyun is sure. “ That is, the price for it will not fly into space when it will be more profitable to fill up with gasoline .
According to Alexander Sirenko, it is not yet completely clear how the situation will develop.
“The gas market feels comfortable when the price of gas is 50% of the price of gasoline. When it is higher, drivers already begin to think whether it needs to be blown out, or whether it is better to buy gasoline. Therefore, it is possible that these 5 hryvnia (which will be added after the excise tax is raised) will “save” the gasoline market. Or maybe not ,” says the expert.
However, the most curious thing is that the decision to increase the excise tax on liquefied automobile gas has not been made.
Moreover, the government does not particularly support this initiative.
“Hetmantsev is saying for the second time that this issue has been resolved and that it is only a matter of time. But there is no confirmation of these conversations yet ,” summarized Alexander Sirenko.
