The legal import of gasoline and diesel fuel to Kyrgyzstan in April after excise was lowered totaled 21,977 tons, up from 8,000 tons in March, Deputy Prime Minister Dzhomart Otorbayev said at a press conference.
He said that after excise on gasoline imports was lowered on April 1 from 3,000 som to 1,500 som and diesel excise was lowered from 800 som to 500 som (by 50% and 37.5%, respectively), VAT and excise revenue totaled 69 million som, compared with 20 million som in March.
The results of the drop in excise on imported fuel proved the obvious economic benefits of this step since it made contraband unprofitable. The price per liter of legally sold gasoline is about the same as that for contraband fuel, he said.
He said the government took a big risk by lowering excise on gasoline and diesel since Kyrgyzstan collects 600 million som on import excise and taxes a year and depends on petroleum product imports. But this was done to stop the illegal import of fuel, which accounted for 70% of imports.
By agreeing with proposals by traders to lower excise for fuels the government signed a sort of insurance agreement with them, in which importers agreed to prevent a drop in tax revenue after the tax rate was lowered. A plan was adopted under which Kyrgyzstan would receive 11,000 tons of fuel in April and tax revenue would total 34 million soms. This plan was exceeded by two times, showing that this was the right decision, Mural Ismailov, Deputy Finance Minister, said at the press conference.
Kyrgyzstan imports 115,000 tons of gasoline and 61,200 tons of diesel fuel a year according to official figures. Gasoline imports are expected to increase to 174,000 tons and diesel to 70,800 tons by the end of the year.
Interfax, May 28, 2003