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WB Urges Belarus To Rethink Taxation Of Energy

by Ulrika Lomas, Tax-News.com, Brussels

31 July 2014


The World Bank (WB) has put forward proposals for a reform of the "inefficient" heating tariff system in place in Belarus, in a report issued on July 25, 2014.

The World Bank has warned that the tariff system is unsustainable in the long run, and has recommended reform measures to mitigate the need for tariff increases on households.

"An effective social assistance package provided along with the elimination of subsidies would enable the Government to protect the poor, without jeopardizing the reform," Young Chul Kim, World Bank Country Manager for Belarus said. "Investment in energy efficiency could also significantly reduce consumer energy bills. The analysis shows that energy efficiency measures could reduce household heat consumption by up to 35 percent compared to the present."

According to the report, under-priced residential heat tariffs for district heating, which are currently at 10-21 percent of cost-recovery level, place an increasing fiscal burden on the budget and industrial producers. Because of the cross-subsidies from industrial to residential consumers, Belarusian manufacturers do not benefit from the low import price of natural gas. As a result, the tariff set for the industries is higher than the European average.

TAGS: tax | energy | budget | tariffs | Belarus | Investment | Invest | Investment

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