Blesk’s Finance Minister on 2022 Margin Controls

Date of issue: 8.4.2022 | Source: blesk.cz

How high are the margins according to the information collected by the service stations?

“I learned that the margins were lower in February than in March, which worried me. For example, the average margin for diesel was 3.03 CZK in February and 4.91 in March. For gasoline, it went from a margin of 2.29 crowns to 4.39 crowns This does not apply to all operators, it does not apply to all petrol stations, so someone one could have the same margin or even a lower margin. February was the last month of peace, and at a time when the price of oil on the stock exchange was objectively going up, I don’t think the margins were going up again. I don’t want that the sellers lose or are zero, but the proportionality debate is legitimate.”

Do you think they behaved immorally?

“It just came to our knowledge at that time. But some of them took advantage of the situation. For some a crown of profit is moral, for others three. Entrepreneurship is a business based on profit, no one does business to make a loss.”

You do not want to cap margins just yet, you will wait for the situation to change. But how high would it be if you stared at that ceiling? Would it be determined as a percentage?

“We would look at the eligible costs and that would be the allowed surcharge, that is the margin. It would be in crowns, it wouldn’t be in percentages. It’s quite a complicated calculation that we have prepared, and everything would be governed by the law on prices.

When, if ever, will we get to January prices, which were around 36 crowns per litre?

“It really depends on how long the Ukrainian war lasts. I just can’t predict that right now. In any case, stock prices have to drop drastically.”

The government reduced the excise tax by 1.50 crowns per litre. Why didn’t you apply for value added tax as well?

“First of all, it’s against European law.”

Hooray? As far as I know, there is room for reduction.

“You can temporarily move goods to other tariffs. But this is an extremely expensive measure because it leads to large budget deficits for the state – if, for example, we put fuel at the lowest rate of 10% would cost us tens of billions a year – and at the same time we have to increase pensions, social benefits because we react to inflation, and you money has to go somewhere. VAT won’t help companies, because they charge fuel prices without this tax. And when you look at consumers, everyone who has a car and those who have the most expensive cars would pay for that.”

It will even pay now with the reduced excise duty, right?

“I agree, but the intervention of 1.50 crowns per liter, which will cost a total of billions of units, is something completely different from the intervention, which will cost tens of billions. I was recently at a meeting of the finance ministers of all the member states of the European Union, and everyone warned me not to change the VAT. And you wouldn’t know which minister was on the left or on the right. They have all said, as one man, that it was a very expensive measure. Moreover, politically, it is now easy to temporarily reduce the price up to 21%. But what about these three or four months where the support ends? We need to raise the price again.”

However, people are still laughing bitterly at the fact that you have reduced the price of their tank by about 60 crowns by intervening in the excise tax, and also that it will not be before June.

“It is about the legislative deadlines, the law must be approved by both chambers. It can be valid from June 1 at the earliest. It will apply until the end of September in order to assess how the prices of this raw material will increase. I do not exclude that we extend the reduction of the excise tax. “

And if the conflict ends earlier, for example in May, which we all want, and not because of the price of fuel, will you stop ratifying the tax reduction?

“It just came to our knowledge at the time. We decided after careful consideration. If, in the meantime, these prices go down for whatever reason, we will at least compensate for the losses that everyone suffered during the when prices were highest. And that’s not bad at all.”

The hauliers to whom you have waived road tax and allowed them to defer paying VAT until the end of October say: Thank you, that’s good, but we’re probably going to fail anyway. According to Česmad, even a quarter of companies do not receive a direct financial injection… So are you going to give them something?

“The question is not whether we will or not, whether we want to or not. We have public finances in such a state that we cannot. Of course, we compare what neighboring states are doing , and they support these carriers occasionally and for a limited time. We try to make sure that the economic problems are not massive. That’s why we removed the road tax up to 12 tons, we fix it at a level European minimum over 12 tons, we remove the biofuel blend and place the excise duty at the lowest possible value for diesel in Europe.However, in no time individual cases of bankruptcy corporate may be excluded.”

But Česmad is not talking about individuals. He claims that a quarter of businesses go bankrupt.

“Let’s say it in three months and evaluate it. Each association, including Česmad, defends its sector correctly, we as a government must evaluate the economy as a whole. For me, the support we give to carriers is not small and I firmly believe that this will be enough.”

Former Finance Minister Miroslav Kalousek thinks about this decision to reduce the excise duty: All the experts agree. He will end this communication with a decision on an overall measure. And even worse than possible. Oh no…

“Oh yes, I have nothing to say.”

Well, I understand his astonishment. You and the government have been saying for weeks that it won’t be a comprehensive measure after all. So what made you at least go down with that excise tax?

“I am not broken. Nobody broke me. In the end, I was persuaded by the attitude of the surrounding states not to make the competitive environment worse for our carriers and our citizens. In the single market European today, everything is linked, and once our main neighbor Germany reduced excise duties to the lowest possible European option and the Poles did, it was the only right step for our carriers, who compete with them.”

I know you are from Opava, where the income is rather lower than the national comparison. When you get home, aren’t you upset that you don’t want to help people more, whether it’s because of petrol or even the food VAT that the opposition is proposing to cut?

“I live in the village where I was born and acquaintances speak to me very openly. And I believe that when they saw the totem at gas station prices, notes could be taken which would not be published until ten o’clock in the night. But no one pushed me to do anything about it.”

Not even in a pub?

“I almost don’t go there because I don’t drink beer. I normally go among people, even for shopping. I know how much it costs and clearly people come to me and talk to me, I I’m used to it and it seems normal to me. But in the end, I decide on the basis of analyses, of the impact on the state budget.”

According to CNB leader Jiří Rusnok, we are facing the biggest drop in living standards since the 1990s. Do you agree with him?

“The January forecasts, whether from the Ministry of Finance or the central bank, spoke of inflation at 8.5%, which we are not used to. The rise in inflation above This level is clearly due to Russian aggression. In addition to fighting in Ukraine and killing civilians there, Putin is waging information, disinformation, hybrid and economic warfare with us. These are the consequences.”

How should people handle it? You talk to them through the most widely read medium, and for some it’s not about whether they’ll fly on vacation or buy a new car, but whether they’ll have something to eat.

“I don’t think it’s good for a minister to advise people on how to behave, what to buy or not. I would mind if a minister advised me. But I would ask them not to be afraid to ask for help from the state, not to be ashamed. It can happen to anyone. The social network works, we have resumed the publications, we may resume them if the prices go back to the rise. This time, the emergency can reach people who have never needed help from the state, and I ask them to really talk about it. They have paid honest taxes themselves, which who, in other times, has helped other people. The State is there to advise and help people in need. It is not a question of the budget. If necessary, the sums will be paid. “

The Speaker of the House recently had a storm when she said the state is not there to take care of the people. Have you talked about it with her?

“He didn’t speak and to my knowledge he was taken out of context. I haven’t heard everything and you have to speak for yourself. I think the state should create rules so that there are successful assets in it and at the same time to help those who cannot help themselves, either temporarily or in the long term.Social policy is a right-wing subject, socialist policy is a left-wing topic. Socialist politics wants to help everyone, but compassion and solidarity are right-wing values. In my opinion, those who are successful don’t mind the state helping those who are less successful with their taxes. At the same time, relying on help from others should not be a way of life. But most people who need help are honest people. They have a temporary problem and the state is there to help them solve it. At the same time, it should create simple rules, not have a lot of bureaucracy, don’t tell people too much how to live. »

It’s up to the Ukrainians to decide, not up to ordinary Czechs.” This also gets along against the government and often to you on social media. How do you perceive it?

“It bothers me terribly. I don’t understand these voices. Who are we envying 5,000 crowns a month to? A woman who ran away with a child and a bag with no savings and no longer has a home while her husband is fighting in Ukraine? Our budget for this year is 1900 billion. We don’t know how much the total aid for women and children will cost, but if it was 50 billion crowns, that is, 2, 5% of all expenses, is that too much?When they start working – and want to work – they will pay the same taxes as Czechs under the same conditions as Czechs and support Czech citizens who receive benefits in material need with their work. They are not economic migrants seeking happiness here. I rarely get angry in politics, but such opinions really bother me.”

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