President Aleksandr Lukashenko has increased excise taxes on fuel and tobacco products by his decree No 92 from Mar 9, which was published last night. In particular, tax rates for tobacco were increased by 50%, for the cheapest cigarettes by 13% and for expensive ones by 37%. Tax rates for diesel and petrol were increased by 50%. At the same time, excise taxes on alcohol will remain unchanged for the time being.
The higher excise taxes, coupled with utility price hikes and the ruble depreciation, are likely to boost inflation this spring. The government has had to increase taxes, as the state budget for this year, based on the price of oil at USD 50 per barrel, is in need of revision. Fuel made from Russian oil is Belarus’s main export item, so revenue is likely to be below the target.