With the decision to free the contractors for the construction of priority section Smokovac Matesevo of the latest payment of seven cents, the Government of Montenegro has violated just passed the Law on the highway, but also opened up a huge potential for abuse, bearing in mind the almost non-existent capacity of the state to control large projects such as the construction of the motorway Bar-Boljare.
In fact the exemption from tax on fuel is not based on the Law on the highway as it is defined for VAT, income tax, concession fees and taxes and contribute to the workforce, but represents a unilateral decision of the Government to Chinese company and its partners in Montenegro relaxes of one part of the cost which will undeniably significantly impact the profit that will be realized from this transaction. In this regard, the Law on the highway does not leave room for the contractor to be exempt of the disputed taxes on fuel.
The Government of Montenegro in the reasoning of the decision adopted yesterday did not provide even a rough economic estimate of how much less money will flow into the state budget, which, when you take a general assessment of the portion of fuel costs in total costs while undertaking construction works, certainly it will not be a small sum.
In addition to being adopted illegal, this decision allows contractors and subcontractors that fuel purchased at a discounted price is used for other projects not only highway construction, and to make significant savings and consequently increase profits. In practice it will be even tomorrow impossible to check whether the fuel is purchased for the construction workers’ camp and access roads only used on these sites, or machines are used by contractors and subcontractors on other private projects. The Government decided on the liberation of the excise although they very well know that currently there is no capacity nor the procedures to ensure that there wont be abuses.
This also applies to the exemption from VAT, profit tax, labor, import of machines, but will be particularly problematic for the use of petroleum products whose consumption represents a significant item in the construction business.
The decision was made at a time when the Constitutional Court is still considering the legality of the Regulation on which basis citizens for months are unlawfully charged disputed tax. Despite all, the Government has decided to exempt the Chinese partner from the payment of taxes, and on the other hand, thanks to total passivity of the prosecution, citizens continue to pay the full cost of this illegal decision.
With this decision the Government of Prime Minister Milo Djukanovic continues to put the public with a fait accompli, and shows that still prefers the adoption of decisions that have not passed the test of the Parliament of Montenegro.
It is also the continuation of the disastrous economic policies that deliberately sacrifice the public interest and standard of Montenegrin citizens for the sake of personal and profit interests of so-called “strategic partners of the Government, and breaks the Constitution of Montenegro with open promotion of the principles of inequality before the Laws of this state.
Dejan Milovac
Director of the Research Center of MANS
