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North Macedonia: Excise Duties are the Currency of Political Subterfuge

Regardless of the fact that a 2019 law officially aligned North Macedonian excise duties with EU legislation, these indirect taxes face constant change.

Experts and stakeholders respond constantly by insisting that a high percentage of taxation on this basis is unrealistic, the biggest evidence for which is the fact that it varies according to the populist needs of each incoming government.

So, when mass dissatisfaction started building over the expensive energy for households, the government found the strength and a way to reduce excise duties on energy. However, in contrast, whenever the budget is lacking funds, the government has resorted to hiking excise duties on tobacco products and alcohol.

According to companies, such frequent changes to legal regulations have a devastating impact on their operations by making it impossible to conduct long-term cost planning, which forms the basis of every single business. This causes the strongest reactions among foreign investors, some of whom came to the country precisely because of its cheaper energy prices or similar advantages, and have found their costs change drastically before even completing the construction of their factories.

Tax increases cause the strongest reactions among foreign investors, especially those who came to the country precisely because of its cheaper energy prices or similar advantages

Another problem is the lack of private-public dialogue on this subject, while the government makes decisions today for tomorrow. This is likely to be a major subject of discussion and revision if North Macedonia ever joins the EU.

Thats why the message of the business sector is short, clear and simple: the state must reduce its non-productive expenses and shorten the unnaturally large administration, thus creating space to cut at least some excise duties. As things stand, the economy is forever condemned to subsidise the huge state apparatus that doesn’t provide much benefit in reality.

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