Economists Concerned about Psychological Impact of Increasing Cost of Fuel

Independent economists believe that, according to the real relationship of markets, higher prices for gasoline and diesel fuel will create the effect on other segments of the market. This is not only economic, but also psychological factors.

The economist Gubad Ibadoglu believes that the next step would be to increase in fares in urban public transport by the Tariff Council.

According to economists, on the background of what is happening in the world, i.e. fatal decline in prices for oil and petroleum products, the government policy does not correspond to the economic logic. "Earlier, when oil prices in world markets rose, the government argued its steps with the need to manage the national economy and administrative price control in market conditions. Now it serves only as a justification of political and corporate goals," stressed Ibadoglu.

Experts are not optimistic in their expectations. Most local independent experts are unanimous in the opinion that the government in order to "close the hole in the state budget," which will undoubtedly arise from the reduction of the flow of petrodollars, will resort to increase the commitment of consumers and entrepreneurs by administrative price regulation, again basing these steps on the concomitant increase in taxes and excise duties.

This can lead to increased social tension, as it will accelerate the decline in the purchasing power of the population. Spillover effects will also show themselves in the increase in the cost of family budgets and job cuts.  ---08D

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From January 13 the retail prices for gasoline and diesel fuel have risen by 2 gapik (kopecks), as well as the wholesale price of liquefied petroleum gas. The decision was made by the Tariff Council under the government of the country.

Thus, the price of gasoline A-92 is 0.72 gapik and diesel fuel is 0.62 gapik. Retail gas prices have not changed.

These innovations are related to changes in legislation, and in particular, a new form of levying the drivers’ tax.

Thus, up to 2015 individuals paid drivers’ tax for cars with engine capacity passing inspection. Legal entities paid drivers’ tax to the state budget for the cars on their balance sheets.

In this case, legal entities and individuals paid tax also for unserviceable cars.

According to the report of the Tariff Council, now the drivers’ tax is included in the price of fuel, and the process of payment and collection of taxes is simplified. In addition, people less likely to use cars pay less tax.

For legal entities the process of declaration on drivers’ tax is abolished, said the Tariff Council.

However, despite the fact that the innovation is presented as good, in fact, motorists will have to pay drivers’ tax 2-3 times more than before.

So, every year about 1.3 million tons of gasoline and 700,000 tons of diesel fuel are consumed in Azerbaijan. Taking into account the average consumption of gasoline each car, it becomes clear that instead of tax of an average of 20 manat, people will have to pay 50-60 manat. -03D-