Albania President Blocks Costly Tax Stamp Deal

Contraband cigarettes | Photo by : Tabacco Campaign

Defending his decision to return the bill to parliament, the president said that changes to the bill that would pass the management of fiscal stamps system into private hands is in breach of the Stabilization and Association Agreement, SAA, with the EU.

“This bill would change the tariffs in place at the time of the entrance into force of the SAA,” the president said in a statement, defining SICPA’s costly stamps as a tax imposed on imports. “Since the entrance into force of this agreement no new tariffs can be imposed on imports and exports,” he added.

The proposed law would have opened the way for a deal between the Ministry of Finance and the Swiss firm SICPA Securities to provide the stamps.

An investigation by Balkan Insight, published in October, showed that the multimillion-euro tax stamp scheme, aimed at fighting Albania’s illegal tobacco and alcohol trade, would be costly and ultimately ineffective.

It found that the new fiscal stamps system supplied by SICPA Securities is not in line with international agreements on combating the illicit trade in tobacco products.

Moreover, the system has no track record of reducing smuggling in the countries where it has been applied and whether it is the right solution for the local market also remains open to question.

The government, meanwhile, says this “track and trace” technology will help fight contraband trade in cigarettes, spirits and other products, bringing in much needed revenue.  

However, tobacco companies have complained that the tender to award the exclusive contract was not transparent. Contacted by Balkan Insight in October, SICPA declined to comment on the allegations.

The deal with SICPA to provide revenue stamps for the Albanian government through its SICPA Trace system, at 14.4 euro per 1000 cigarettes over a period of ten years, is twice as expensive as rates offered to other countries for the same system. The same company offered the Philippines the same system a year ago, at $7 per 1000 cigarettes.

In his response to MPs on Wednesday, the president also argued that the proposed agreement could have a negative impact on Albania’s local businesses, which eventually would trickle down to its workforce.  

“This bill not only raises the costs of production of the local industry, but also could bring about negative effects for its employees, who could eventually lose their jobs,” Topi underlines.