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Budget revenues reached 28.9 percent of Gross Domestic Product during 2021, marking a new historical record in these 30 years of transition according to official data from the Ministry of Finance.
The highest improvement in relation to GDP was in the Value Added Tax, whose receipts reached 9.1% of GDP from 8.1 percent in 2020.
The fiscal result improved by 2.5 percentage points within the year, but the factors that have supported this success are mainly related to the increase in consumer goods prices.
Data on foreign trade from INSTAT show that imports in quantity during 2021 increased by 11.4 percent, but in value they were 32 percent higher than in 2021. For the same amount of imported item, customs collected more more VAT in 2021 than in 2020. For each price increase automatically increases the revenue that falls as a percentage of prices. Rising prices are seen to have been responsible for at least two-thirds of revenue results and the rest is attributed to higher consumption after the pandemic.
For example, for a liter of oil at a price of 180.8 lekë in December 2021 the budget collected 36 lekë VAT from 30 lekë it collected in December 2020. The increase of prices indirectly increases taxes on consumption.
The increase in the prices of imported goods has a positive effect on budget revenues, as net tax receipts on interest rates increase, but the negative impacts will be for consumers, as they will have to pay higher prices for the goods they consume and for result in more taxes for the same item.
High receipts due to rising prices have continued this year stimulated by the Russia-Ukraine war. During January-February 2020, imports of goods in quantity increased by 4.6%, while value increased by 26.7%. Almost the same amount of products have been paid about 24 billion more, or almost 200 million euros more, a cost that is expected to be transferred to the consumer through more expensive product prices.
Albania is ranked among the countries with the lowest fiscal efficiency in Europe, in terms of receipts in relation to GDP.
Even without the effects of the pandemic crisis, Albania had low fiscal ratings, as revenues relative to GDP in 2019 were at least 10 percentage points lower than the regional average according to Eurostat data.
Over the years, our country has developed many strategies to fight informality in order to increase budget receipts, but they have always been unsuccessful.
Unless a sustainable economic model is developed, it is more likely that when the effect of high prices passes, budget revenues will go to their old bed./Monitor
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