Gov’t warns of tough nationwide campaign against informality

Tirana Times
By Tirana Times August 21, 2015 11:15

Story Highlights

  • “Time is running out and we will repeat this appeal more often until the start of the operation which the same to the operation on electricity, will not stop against anybody or any reason," Economy Minister Arben Ahmetaj has warned

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kasaTIRANA, Aug. 19 - The Albanian government has reconfirmed it is committed to undertaking a nationwide campaign against informality and tax evasion in the next couple of weeks similar to that on electricity launched in late 2014 to curb massive thefts and collect accumulated unpaid bills.

Speaking at a press conference on Wednesday, Economy Minister Arben Ahmetaj described the new nationwide campaign as a "huge and frontal battle against informality in the economy."

Unveiling that 30 percent of businesses operating in Albania are not registered at all and do not use cash registers, Ahmetaj called on businesses to hurry and take all measures before the nationwide operation begins in September and severe penalties are imposed on them.

“Time is running out and we will repeat this appeal more often until the start of the operation which the same to the operation on electricity, will not stop against anybody or any reason," warned Ahmetaj.

A survey carried out by the economy ministry has shown 50 percent of businesses operating in Albania do not issue tax receipts.  Around a third of businesses operating in Albania are not licensed at all, do not have cash registers or do not use them at all, says the ministry.

“These are the final appeals to take measures for everybody who doesn't want to have trouble with the law and the state," warned Ahmetaj.

“In this operation, the same to the electricity operation, we feel part of a strategic alliance with citizens and consumers and all big and small businesses which regularly pay taxes," said Ahmetaj.

Prime Minister Edi Rama had earlier warned that new legal measures will be adopted to tighten penalties against informality.

“It will be a complex operation. The Parliament will examine at the beginning of its new session a package of tougher criminal penalties against tax evasion, smuggling and the slavery of informal labor," Prime Minister Rama has said.

“The government is determined to go through the new battle in the customs and tax administrations. It is an unstoppable operation until the rule of law is set in Albania's economy," said Rama in a meeting with tax directors later on Thursday.

Albania's state inspectorate says it has identified 900 cases of informal workers and 1,800 others without individual contracts during this year, mostly working in the construction and services sectors.

After the electricity campaign which has brought the government around 100 million euros in extra income, the Albanian government intends to undertake a similar campaign on running water to curb massive thefts and distribution losses.

The poor performance in the first half of this electoral year has forced the Albanian government to revise downward its overoptimistic 2015 budget while the International Monetary Fund has postponed its new loan tranche as part of a three-year Euro 331 million loan.

In its latest meeting, the government approved 16.2 billion lek (€114.6 million) in spending cuts following failure to meet its revenue target, a decision which was made transparent only after being published on the Official Gazette.

The Albanian government has denied it is considering taxation on monthly wages of up to 30,000 (€210) which would affect all Albanians who have been excluded from personal income tax for wages of up to 210 (€105.6) Euros since early 2013.

“There is no change in the personal income tax system and no plan for any possible change in this direction," said deputy Finance Minister Erjon Luà§i, adding that the fight against informality will be the focus to increase government revenue.

“The main focus on increasing budget revenue will be the fight against informality and tax evasion, improving efficiency and administration in the tax and customs sectors," said Luà§i.

The finance ministry says it has hired an extra 500 tax inspectors who are working all over Albania to raise awareness on the fight against tax evasion and informality ahead of a warned nationwide campaign.

“This precedes a bigger campaign against informality which includes a full package of measures that will be introduced soon," said Luà§i.

The Albanian government and the IMF have already revised Albania’s GDP growth for 2015 to 2.7 percent, down from an initial 3 percent on lower international oil prices affecting exports and the deterioration of the situation in Greece.

Unlicensed small businesses queue to register

A warning by Prime Minister Edi Rama that the government will launch next September a nationwide campaign against informality and tax evasion similar to that on electricity has had an immediate impact on small businesses with long queues reported on the country's business registration centers.

While it normally takes one day to register with the national registration centre, local media report there are people who haven't been able to register their businesses for one week due to the overcrowding of business registration centers.

Most of the people registering their businesses are street vendors, barbers, tailors, small store owners who are striving to make ends meet at a time when household consumption has also been hit by the payment of accumulated unpaid bills.

While key taxes such as the personal and corporate income taxes remained unchanged, defying businesses calls for a return to the flat tax regime after the corporate income tax was raised by 5 percent to 15 percent in 2014, the tax burden in 2015 further increased by raising the withholding tax on dividends and rents and capital gains to 15 percent, increasing the circulation tax on fuel and imposing higher excise rates on tobacco. In addition, electricity prices rose for business consumers and around three-quarters of household consumers.

Gov’t urged to consider businesses as partners

Business representatives have hailed government's initiative to curb informality, estimated at around 30 percent of the GDP, but say the nationwide campaign should be led without creating panic and using extreme measures.

“The business community must be considered a partner and inspections against informality should be carried out without damaging partnership with fair businesses," says Nikolin Jaka, the head of the Tirana Chamber of Commerce.

Zef Preà§i, the head of the Albanian Center for Economic Research, says that long-term ailments such as tax evasion, informality and corruption cannot be eliminated with campaigns of several weeks and extreme punishment, but with everyday determination and the cut of corruptive links between politicians and businesses.

Meanwhile, the opposition Democratic Party has announced a series of protests next September against “government's arbitrariness and corruption and the ailing Albanian economy.”

Opposition Democratic Party MP Ridvan Bode, a former finance minister for eight years in the 2005-2013 period, has condemned the government rhetoric about its warned campaign against informality next September, saying that such a campaign cannot be led by police.

“Police operations cannot be used on everything, taxes are a kind of system and by this I mean even the computerization, the administration and the legal support provided by the justice system. We must have functional systems," says Bode who was in charge of the country's public finances during the Democrats’ eight years in power.



Tirana Times
By Tirana Times August 21, 2015 11:15