Lower budget revenues may result from higher car and cigarette taxes

Excessive VAT and excise duties may lead to a zl.4 billion shortfall in the state budget this year, experts suggest. Rather than the intended revenue growth, higher duties are actually causing financial losses to the state budget. The experts say the deteriorating situation in the automotive, tobacco and spirit industries is caused at least in part by exorbitant taxes. In the first four months of the year, budget revenues from VAT and excise on cars were some zl.190 million lower than last year, according to Wojciech Drzewiecki from automotive market research company Samar. While taxes constitute 22.71% of the price of a new car, in the case of cigarettes the ratio is 69.7%, which industry experts say is stifling the market. In the first quarter of this year, the tobacco sector recorded its first losses since 1989. Jan M. Wierzbicki, corporate director of tobacco company Reemtsma Polska, estimates that VAT and excise revenues from tobacco products will be zl.2 billion lower this year than in 2000. (Rzeczpospolita, June 16-17, p. A1) T.J.