TIRANA, March 11 – With consultations on the 2016 budget already under way, the Konfindustria business association has called on government to be careful with the new fiscal package after tax hikes in the past couple of years.
Citing a sharp informality rate of around 50 percent of the GDP, Konfindustria suggests that the 2016 budget should be based on better fiscal administration and structural reforms promoting economic growth.
“A further increase in taxes would produce undesirable consequences for the country’s competitiveness in attracting foreign direct investment, set conditions for increased tax evasion by affecting regular business and household taxpayers, reduce budget revenues, and make domestic goods and services less competitive to the imported ones,” says Konfindustria’s administrator Gjergj Buxhuku.
Urging government to handle pressure on new tax hikes from the IMF, which assisting the Albanian government with reforms and a Euro 334 million loan, the association says the last two fiscal packages produced negative effects on the business climate in Albania.
“Government should handle possible pressure first of all from the IMF as a result of the bilateral deal in 2014 but also from other partner international institutions for possible new tax hikes in 2016,” says Konfindustria.
Starting January 2015, Albanians will pay higher taxes on non-wage income, fuel and tobacco, which are expected to cost both households and businesses an extra 112 million euros in taxes. In addition, higher electricity prices are expected to have a negative impact on the budget of both households and businesses.
While key taxes such as the personal and corporate income taxes will remain 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 fiscal burden has further increased by raising the withholding tax on dividends and rents, increasing the circulation tax on fuel and imposing higher excise rates on tobacco.
