Economics professor Shkumbin Misini assessed that price caps are contrary to a free market economy and can only be applied in cases of natural disasters. According to him, the Government of Kosovo should abolish excise duties and value-added tax (VAT) on fuel if oil prices continue to rise.
“A market economy means self-regulation based on supply and demand. This can only be applied in cases of natural disasters such as earthquakes, or during a pandemic. During the coronavirus period, the real price of a mask was 25 cents, while it was sold for two euros, so in such cases it is necessary,” Misini told Kosovo Online.
He believes that a law introducing price caps would lead many small and medium-sized enterprises to bankruptcy due to higher operating costs. Large companies, on the other hand, have the capacity to absorb the impact of price caps.
Misini says that instead of imposing limits, the Government of Kosovo could regulate prices through excise duties and value-added tax on fuel, which should be abolished if oil prices continue to rise.
“Price caps are not the right solution, except for abolishing excise duties. So, if oil prices continue to rise, then VAT should also be abolished, because inflation continues to increase. A few days ago, I noticed a 20 percent increase in the prices of consumer goods, and this is explained by the rise in oil prices. Under these conditions, abolishing excise duties is necessary. If oil prices continue to rise again, VAT will also have to be abolished,” Misini said.
