TIRANA, Aug. 11 – 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.
The reaction came after reports by local media which unveiled a draft law introducing a 5 percent on personal income of up to 15,000 lek a month and a 13 percent rate for income of 15,000 to 130,000 lek (€916) and a 23 percent rate for income of more than 130,000 lek.
“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 has announced a new nationwide campaign to curb informality next September as public finances are struggling, warning that new legal measures will be adopted to tighten penalties.
“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 Edi Rama has said.
The draft law sparked public outrage and was even opposed by MPs from the ruling coalition, including Erion Braà§e, a ruling Socialist Party MP who chairs the parliamentary economy committee.
“I don’t think we need to change the lower threshold of personal income tax. We simply need to collect taxes. Failure to do this cannot turn us back with new taxes for workers,” said Braà§e.
The Socialist Movement for Integration, the key ally of the Socialist Party, also opposed the project, saying that government should focus more on efficient collection rather than tax hikes.
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.
