-The government of Albania will support all the commuters using the urban and interurban bus lines by allocating an amount of 500 million lek or $5 million to cover the public transport fare hikes, so that citizens are not financially affected from the war impact on the oil and fuel prices.
Funding the public transport is one of the seven points included in the recently adopted Social Resistance Package, about which the Prime Minister Edi Rama discussed with the representatives of the transport associations.
The government head noted that under the fresh conditions triggered by the international crisis, it is important that citizens face no transport fare hikes and insisted that quality service should be provided by this sector.
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Hello everyone and thank you for taking the trouble to come here, although it is pretty easy for you as you travel by bus. This is a joke and I would actually like to thank each and every one of you for taking the trouble and be together with all the representatives of the public transport companies operating urban and interurban bus lines, so that we can communicate to the public one of the points concerning the sector you operate in and included in the government’s Social Resistance Package amid this very difficult time.
We have made a final and unequivocal decision that we won’t change oil taxes and of course we have done so after conducting all the necessary calculations and after having explored all possible ways to address this situation.
Given that we have previously made another equally firm and final decision and without ever imagining that a war could start with one of the world’s top energy producers, gas in this case, but the two decisions are related, as we have also decided not to alter the electricity price for 726,000 households that are residents in Albania, according to INSTAT, and for 95,000 small businesses.
Meanwhile, of course, as much as this measure is designed to primarily protect the people most in need, the other decision not to alter the oil taxes requires for the government intervention to protect public transport. Based on all the analysis and reports, it would have been impossible for the public transport companies to resist even if the bus tickets price was to be increased, which of course wouldn’t be welcomed by the citizens, who would be directly affected by such a move.
It is for this reason that the government decided to allocate an amount of 500 million lek to cover the difference and demand that you don’t decide to increase the transport fares during this delicate stage. How this is going to happen in terms of the modalities this is something that has been already prepared and the Minister will propose an idea about this. It is crucial that the public transport service remains operational.
On my way to here I learned that the International Energy Agency had officially announced news that is not a positive one, but which really confirms what we have repeatedly mentioned that the worst to happen isn’t actually what we see and what we are discussing now, but the fear of shortages of fuel and electricity.
Although you might be ready to access the market and decide to purchase it regardless how high the price is, you won’t be able to do so, because you may run out of these commodities. The head of the International Energy Agency himself warned today about the potential for a global supply shock for the first time in decades.
Taking notice of what has been going on and of what I have been reading and recently informed by the relevant ministers or experts, the world faces an imminent threat from a situation similar to the 1974 oil crisis, when Albania was not part of this world as we were isolated inside our bunkers, but the world economy went through a very dramatic moment due to the lack of proper oil supply capacities.
The Agency has unveiled a 10-point plan, which includes two points we have been discussing recently and have been included in our own plan to cut the energy and oil use, but we have refrained from unveiling them so that we can avoid reaction. It is a serious problem when one is unwilling to accept and recognize facts.
The person who doesn’t accept facts is a problem. We encounter this in our daily lives and in the debates we sometimes engage with our friends. Even our own children sometimes refuse to recognize and accept the facts, but amid such a crisis situation the world is not ruling out that World War III may break out in the next few months.
Refusing to accept facts and speaking as if we are going through a normal reality, with the abnormal normal thing being the government warning of a crisis, this is really a serious problem. In its plans, the Agency also highlights something we have been discussing and will continue to do so. We will hold another cabinet meeting. At the cabinet meeting earlier today we decided to declare a public holiday on Monday. Taking into account the post-meeting explanations, we will convene the cabinet again to declare Monday a car-free day, while Sunday may be gradually declared as a one day a week as a car-free day to cut oil use and not to cut pollution. We are also mulling plans for employees to work from home three days a week, as was the case during the pandemic, not because of any infection this time, but to save energy and electricity. This is the situation.
Together with the Minister of Energy we held talks with a United Arab Emirates delegation and the main goal of our visit, taking also advantage of Albania’s day at the Dubai Expo 2020, was to explore potential ways to ensure supply and the Crown Prince of the United Arab Emirates, one of the top oil producers in the world, acknowledged that the situation with the oil supplies is not favourable and the prices hike is just the first episode of the serial that will possibly follow.
Neither in that meeting nobody affirmed for sure that this would possibly be the case, but the possible scenario is as follows; the prices will go up and at some point the markets will possibly face shortages or run out of oil supplies, meaning they will offer less or insufficient supplies.
In the meantime, we will sit to discuss a medium-term strategy on how and what we should do in order to enhance capacities of public transportation, especially when it comes to urban transportation, because inter-urban transportation is something else. What should we do to boost capacities of public transportation and start to massively discourage use of cars in cities?
This is something it would be best to address together and find out whether this would be possible, figure out the benefits. We would be able to do so if we really offer a serious alternative to the people who are used to driving their cars, but who would like to shift their attitude and use public transportation.
The last thing I would like to say before giving the floor to the Minister is that the essence of this effort is that we won’t be able to do everything so that everyone doesn’t feel the impact of the war.
The war with real combat events, bombs, destruction and casualties would be the real problem, but it would be useless and counter-productive if we all were not to accept and recognize this fact and instead be divided into a majority and a minority of people just for the sake of some delirious individuals, charlatans, ignorant, cruel and heartless people, who, even when they are aware, still seek to take advantage of the situation to incite hatred, divisions and troubles. We need to be united behind facts, as it is of course normal for everyone to differ in our opinions when it comes to the solutions. However, we should all acknowledge and be united when it comes to facts. We can’t be divided about facts. We can’t have alternative facts that are inexistent.
Therefore, it is important to understand that the war is real here in the form of price hikes. God forbid it if the war was to expand further as we would find ourselves in a completely different world, in the sense that we won’t be able to engage in such conversations. But for now, it’s real as it hits the economy hard, and the bet made by that gentleman in the Kremlin is very clear since day one; to test patience among his followers and public opinion in the democratic world. How much and who will be able to endure more?
While they face sanctions, the Western democratic world is under the pressure of soaring prices. If the front of the democratic world was to disintegrate because of a wave of protests, which may take place at a certain point, then the bet would be in his favour.
We agreed to publicly announce the imminent energy crisis and that’s why I appeared at a press conference to warn of the impacts of the crisis. However, they rushed to call on people to take to the streets and stage protests, claiming that the government would increase the electricity, which I didn’t absolutely suggest. On the contrary, I clearly conveyed the message that the government would do whatever it takes to protect household consumers and small businesses.
Some claim that “no crisis has gripped the country and the government is just seeking to find an excuse so that it can increase the electricity price.” But here we are today. And this is not because I can predict the future, but it is all a matter of information, analysis and opinions expressed by experts in my team and advisors, as well as international experts we have been able to contact and by listening to the statements of our counterparts in other European countries and this is how we have drawn our conclusions.
It is unimaginable that one can take advantage of the ongoing crisis and even of a war that has broken out there and is affecting the whole planet. It is miserable that one can lead citizens to a dead end and stage protest shaming the country.
I would really understand protests if the government fails to realize or refuses to admit that a crisis is going on after 19 or 20 days. But it is really shameful to take the streets and stage protests right at the centre of the capital while the government is repeatedly stating it is living up to its duty and it has done this and that to date” and shows through figures and facts how it has provided protection to household consumers and small businesses, whereas scenarios to deal with the food and fuel prices situation will be announced within the week. It is shameful to protest now.
Thank you very much! We would be glad to hear your comments too.
– I am a representative of the Green Line, the new urban transportation line that became operational last year. I would like to voice my concern and call for the law to be reviewed as no reference to fuel consumption meters has been in place since last year. I would also call for a meeting with the main representatives of the public transportation service, mostly in the capital, to discuss costs and explore long-term plans designed to transform the urban transportation service in order to meet European standards by introducing hybrid or electric buses so that the emissions significantly reduce.
PM Edi Rama: I already stated earlier that a strategy has been developed by the government and it is already in place together with a set of planned measures; while work is going on to define financial projections, because it is a sector that requires important investments and significant financial support by the government. However, taking notice of the current situation I think it would be appropriate for us to sit and discuss the issue you highlighted and explore ways to speed up efforts so the urban transportation service improves significantly.
– It is probably not the right moment now because of the ongoing war, but since I have a good understanding of economic theory and I have made a financial analysis and I can assure you of the fact that all the operating urban transportation lines are operating at losses. I mean a genuine financial analysis and I would invite the Financial Minister to sit with us and I can explain why the urban transportation companies are operating at a loss, while we are striving to improve quality of the service.
PM Edi Rama: I understand it, but I find it really difficult to understand how business people claim that they are operating their companies at a loss for such a long time. I find it really difficult to believe if you are telling me that the companies which have been operating since I used to serve as Tirana Mayor and still operate urban transportation lines over so many years. I do of course acknowledge that you encounter many difficulties and need support to improve the urban transportation service, but I really find it impossible to accept that you operate at a loss over so many years.
– I am a transportation sector representative. A government subsidy of 100 lek per each litre of fuel is absolutely helpful at this tough moment and really hopeful for our sector. It is a sector hiring around 10.000 people and a whole chain of families earning their living from work in this sector. In order for the sector to further survive more infrastructural and financial components will be needed in the next three months. What policy can we pursue so that we can go on with our activity? Can the government intervene to provide subsidies for circulation tax and the category of travellers that benefit travel for free?
PM Edi Rama: Again, I already said we will sit and discuss together. Meanwhile, the strategy has been already developed. The action plan is also in place, but it comes with a deadline, taking into account all the recent developments. With the current conditions forcing everyone, including motorists using private cars to limit use of their vehicles because of the fuel prices, it is probably the right moment to take advantage of the situation and transform it into an opportunity since every crisis contains the seed of opportunity. All it takes is just figuring out where this opportunity stands. This probably represents an opportunity for us to make public transport commuting more popular and attractive. However, to do so the public transport commuting should improve quality, so that one decides to take the bus instead of his or her private car, because the service is satisfactory and much cheaper. I agree with that, but we should forget these ideas about removing taxes and VAT. One should forget such ideas because it is crucial for us to maintain a strong fiscal structure of this country that wouldn’t work otherwise. How would we be able to provide such subsidies if no taxes are collected? This is the essence. This is because many people call on the government to cut and remove this or that tax and tariff, which would certainly lead to lower prices temporarily, but it wouldn’t lower prices to the level anyone would have wished. Why? Because the market pursues a completely different logic. Why are prices in many European countries much higher than in Albania? What is the reason? The rising prices reflect the dear and the future supply shock. It doesn’t take much thinking about it.
It is also impossible to remove taxes included in the fuel price, because certain categories need compensation and we will continue supporting them. Can we increase the electricity price? It would be the easiest decision for us to make and therefore affect everyone, every household and business and we can very easily collect the increased electricity prices as nobody would escape that. But, would such a decision be morally correct at a time of crisis when the war is having its impact and effects on everyone? Would it be morally correct for us to place such a burden on retired people, disabled individuals, tetraplegics, blind people and every rural and farming family that desperately need electricity?
Would this be morally correct? No, it wouldn’t.
Of course we would also be able to reinstate taxes on small businesses. But would this make any sense?
If we were to increase electricity prices for small businesses, such a decision would force them to fire at least one worker. If we were to increase the electricity price for small businesses, at least 95,000 people would immediately become jobless, because they would either pay the increased electricity or the wage of a worker. But small business is the engine of employment and we want small business to strengthen further and they are already strengthening. If you were to take a look at the data on small business, revenue, and employment you would figure out that small businesses are strengthening gradually and as such they are our main allies when it comes to employment. This is also the case in your sector. You said that the public transportation service hires at least 10000 people.
There are also individuals who take the streets to protest, claiming that businesses are avoiding paying their tax liability and these very individuals are the ones avoiding paying taxes. There are individuals who protest on behalf of poor people, claiming that the government has failed and has yet to build the homes for quake-affected poor families. This is what is happening.
We can’t remove VAT or any other taxes. We can’t do so, because VAT exemption has turned out to fail yielding any positive outcome. We have cut VAT, we have removed VAT, but the market doesn’t work that way. Prices drop very temporarily at some point and prices increase again. Only merchants benefited when we cut VAT on agricultural inputs. But we want farmers to benefit and not grocers.
What do they do?
The price decreased initially but it rose again later and the increased price has nothing to do with the VAT rate, but with the overall increase that started as a post-pandemic inflation trend.
-Prime Minister, I would like to make an explanation. I actually meant the VAT on tickets sale, as we currently purchase VAT-exempted tickets from the Tax Administration. I meant subsidies for the circulation tax and the tax on ticket sales.
PM Edi Rama: For everyone to know the state budget money belongs to citizens and the government is making available everything it can to you and every citizen. But everything would also depend on the future of the country’s economy.
We won’t abandon anyone and we won’t give up and we won’t throw our hands up.
If we would be forced to throw our hands up we would do so if we will have to seek shelter from air bombings. But I hope things won’t get worse.
-I represent the public commuting service, part of the National Association. What we heard today is actually very positive and to the benefit of our sector. I would like to make a clarification regarding public transport as a whole. I would have wished that we would consider and treat it a bit differently, as our service prices are set either by central or local government. So, if VAT is changed, it doesn’t influence the price decrease or increase, but it simply helps.
PM Edi Rama: You should know one fact. Albania is the country with the lowest fiscal burden on the households and small businesses. No country in Europe applies such lower or no tax at all on small business.
No other country applies zero profit tax rates or zero VAT rate on small business, but Albania. I am highlighting this fact as I am constantly being told about what is happening in North Macedonia or in Serbia. Of course I see what is happening there. Do you want the government to set tax rates applied in both countries? Do you want a 10% tax rate to be imposed on small businesses and a 20% VAT rate? We can do it if you wish us to do so.
The same goes for the salaries. They apply a 10% tax rate on personal income no matter how high the salary. Just imagine paying someone a monthly wage of 40,000 lek and impose a 10% tax rate on that wage%. The state budget would grow significantly if we were to make such decisions. The same would go for the social insurance contributions. There are individuals who call on the government to increase pensions. The government definitely wants to do so. But do you think workers here will be able to pay higher social contributions rates if we are to increase them to the rates applied by Serbia and other countries? I don’t think so. Why is our government pursuing such a policy? This has been done to strengthen the household and small business. We are being accused of increasing taxes and this is actually intolerable? What taxes have been increased? The only taxes we have increased are the personal income taxes and profit taxes on individuals who earn more. A 10% rate was imposed on large businesses previously, whereas the current tax rate on them is 15%. The construction tax rate was 2%, whereas an 8% rate is applied now.
It is the highest tax ever imposed on the construction sector and the local government collects huge revenue from such a tax.
What taxes have been increased? We have been totally aware of the decision to include some taxes in the fuel price since we made such a decision back in 2014. We have included the circulation tax in the fuel price. It was actually a decision made by the previous government and it is one of the very few right decisions, because everyone pays according to the fact how frequently they use their vehicles. If someone keeps his car in the garage and uses it very rarely, why should he or she pay the same tax rate?
-Mr. Prime Minister, as we speak about the public transportation service I think it shouldn’t be the same thing, because the bus cannot be an alternative to the bus. If a bus would pay the same tax rate applied to every other vehicle, we wouldn’t be able to compete with private cars for citizens to choose public commuting.
PM Edi Rama: I am talking about tax cuts, VAT removal and I am speaking principally. In the meantime, what you are actually saying is clearly shown by the fact that we have come together not to provide information on cars and other vehicles. We are here to affirm that the government will allocate $5 million for you all to keep operating and receive 100 lek for each litre of fuel. You will be benefiting from state budget funds.
Do you want us to remove the circulation tax? The circulation tax totals 27 lek, whereas the government is providing you 100 lek per each litre of fuel. Of course, the reason why we are making such a decision is because we want the public transportation service to improve significantly and meet European standards so that people massively choose to use the commuting service. And this of course comes with a cost. You know it quite well and I know this too since I used to serve as Tirana Mayor that the ticket price is at a minimum level.
The public transportation fares are really low and at a minimum level and you won’t be able to operate without the state subsidies. This is something everyone knows, even those protesting and accusing us of theft.
It is a difficult job and that’s why you will have full government support and respect and this is the reason why we are doing all this effort. We are all working together on this and we will sit to discuss ways to further improve the service. We will do whatever it takes to support this sector.