The only way to improve the situation on Ukrainian roads is to further raise the excise duties on imported and locally produced petroleum products. Mark Magaletsky, the head of infrastructure and energy at the Ukrainian office of the European Bank of Reconstruction and Development (EBRD), stated this in an interview with the Center for Transport Strategies.
"For Ukraine, a decision to improve the quality of its road network is essentially a decision to further increase the excise duties on fuel. Currently, the funds that are collected are not enough to finance the maintenance and construction of roads in full. I see no other option but to increase the excise duties on petroleum products - both imported petroleum products and those produced in Ukraine," said Magaletsky.
According to him, the decision on how much to raise the excise duties is a political decision, but the corresponding levels of taxes in Europe can serve as a guide. "Yes, we all know that the quality of roads in Europe is significantly higher but not everyone is interested in fuel taxes in European countries. However, taxes are also higher there by a factor of 2-10, depending on the country and the type of fuel," said the banker.
He also noted that the raising of excise duties has not yielded the desired results to date because the raising of excise duties has always been late compared with the needs of the industry. "There is no year in which the level of funding has corresponded to the needs of the industry. Therefore, there is annual degradation of the road network, the situation is deteriorating from year to year, and it is getting worse,” said Magaletsky.
For more on this, read the full interview with Mark Magaletsky: We Are Introducing Road Maintenance Contracts Based On Final Result.