Representatives of water bottling factories have sent letters to the Ministries of Agriculture and Finance and the Chamber of Commerce requesting an urgent meeting due to the introduction of excise taxes on single-use plastics.
This excise tax of 40 cents per kilogram was introduced on the import of plastic packaging, but not on the plastic containing the finished product. So domestic water factories and dairies pay excise duty on the plastic bottles they import into which they will pour water, milk, yogurt,... but not those who import these finished products even though they are in plastic bottles.
Domestic producers are now proposing to the Government that PET packaging used in production be exempted from excise duty, to enable a refund - a subsidy equal to the payment of excise duty for producers, or to introduce excise duty for everyone, i.e. also for importers of water, juices,... and other products in plastic bottles or other plastic packaging. For example, because of this, a bottle of domestic water would be five to ten cents more expensive than the same imported one.
This duty was introduced by a proposal to amend the law on excise taxes, which was adopted by the Parliament on May 5, and was prepared by the former Ministry of Finance and Social Welfare with the explanation that they want to reduce the use of plastic packaging and the creation of this type of waste. However, it is paid only by domestic producers, but not by importers of water, juices, dairy products,... to which the majority of plastic waste refers, because they formally do not import plastic but the finished product packed in plastic. The law has been in force since May 7.
The introduction of this excise duty represents an increase in prices by about ten percent, but only for domestic products, not imported ones. The main problem is that this creates additional unfair competition for domestic producers, who are already fighting tough battles with large importers.
Bottled water producers state in letters that now the excise tax on plastic packaging has become a higher cost than the water concession itself, which they consider absurd. They also say that this cost will drastically reduce their business results and call into question further development.
"They bear in mind that the leaders in the sector of bottled water and juices on the Montenegrin market are producers from the surrounding area, who do not pay the stipulated excise tax, directly preventing domestic producers from equal market competition. By weakening domestic production companies and their sales, the state will only increase its import dependence, lose jobs, income from taxes and contributions,...", it was stated in the letters sent to the ministries.
They state that in the past year, they have already experienced an increase in packaging costs by 35 to 40 percent, because most of the packaging for the European market was produced in Ukraine. Suppliers have announced a new price increase of around 18 percent for the third quarter of this year.
Domestic manufacturers are appealing for this legal solution to be changed urgently, because otherwise the state will be responsible for the decline of this branch of the economy.
They believe that the government's goal is to preserve equal market competition, and not to apply laws to the detriment of domestic production, which is why they are asking for an urgent meeting to find a sustainable solution that would not put domestic producers in an unequal position compared to import competition.
Representatives of domestic dairies have already sent similar letters to the ministries.
Last year, the Ministry refused to give an opinion until the law was adopted
When this law was first announced at the end of last year, a group of businessmen sent a letter to the then proposer, the Ministry of Finance and Social Welfare, in which they asked for an opinion on whether excise duty would be paid only on empty plastic packaging or also on plastic bottles that already contain products - water, juices, dairy products,...
They were then told that they cannot give an opinion on the draft law that is in the process, but only when the law has already been adopted. Businessmen believe that this attitude is wrong, because when the law is already adopted, it is too late to warn about its harmful consequences.
Deputies rejected this law last year, because it also predicted a drastic increase in excise taxes on cigarettes.
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