Scaring away real money and the fines law

By Alba 覬a
There is a huge debate being carried out in Albania about the fines law proposed and approved by the Economy Commission that obliges businesses to pay the full amount of fines given by tax authorities prior to any legal contestation. Businesses have raised a protest to demand their right to have a chance to claim that the fine is not regular.
Business Associations have gathered and signed protests. The media is portraying daily the desperate efforts of the representatives from the business community to make the government acknowledge the abuse potential this law gives birth to.
The government on the other side is justifiably concerned about the budget harm that unpaid debt causes, estimated by current Finance Minister Ridvan Bode to loom around 45 million euro.
The debate has been eventually politicized and charged with conspiracy theories. Folk theories abound around loud tragic calls: The government is trying to promote monopolies! It targets the demolition of specific businesses!
Beyond this debate one has to focus on a purely economic reasoning. What is the projected effect of this measure on a sector that practically feeds the Albanians: small and medium size businesses?
The simple answer was given by former Finance Minister and currently opposition member, Arben Malaj in a TV interview: It scares away real money!
Malaj argued that the informal money, and by that meaning the entire criminal world operating behind it, will definitely find ways to cope with the novelty and circumvent the penalties. These players will simply adjust their strategies as the rules of the game change.
Real money on the other hand will be left bewildered and unprotected at the mercy of corrupted tax authorities and unfair competition pressure. Indeed many businesses fear complete cessation of their activity given the threat upon their liquidity. A fine to be paid immediately costs a business an entire cash flow reversal even if it is applied at the ameliorated level of 25 percent. Employees registered with the Shkodra Labor Union are even more farsighted. Anticipating the loss of their job in such a scenario they predict protests and strikes.
One is left to wonder then at the persistency of the government to approve such a law.
First there is no coherent model that would fit the European standards in the future harmonization of the legal framework. The only model resembling this fine paying scheme is the Serbian one, a leftover of communism.
This urgency is also unsupported by the government’s previous rhetoric. An administration that has boasted a budget surplus to be dedicated to investments cannot claim that such a drastic measure is rightly timed.
The administration has also been deaf at the proposals of its own moderate individuals that have suggested facilitated conditions for business. No consideration has been given to the establishment of a special court for businesses or even shorter legal procedural timeframes that would curtail the ways business can cheat upon the government.
Finally the fight against corruption and fiscal evasion should start in the government own house: tax administration authorities, customs offices. The evidence supporting the fact that these sectors generate financial losses is definitely more substantial that the one blaming unpaid debt from business. It is definitely telling that the report “Corruption- Perceptions and experience” of the Institute for Development Research and Alternatives (IDRA) shows clearly that the public opinion holds customs officials to be the most corrupted social actors and tax authorities as second most corrupted category.
Hence there is ample room for a reexamination of the law. Since it has been approved already in the parliament there are only a few alternatives left for those who don’t want it to become a reality shaping their daily dynamics. The Constitutional Court will have to decide upon the law’ legitimacy even before the public has finished questioning its rationality. But that will be no news in this country.