By Ardit Bejko
TIRANA, July 8 – The parliamentary Economy Commission passed a draft of a local tax bill that would ask homeowners to pay more for their houses. Construction companies would have to pay more for their investments, too, if parliament passes the law.
The bill introduces a new criterion to calculate the tax on real estate. The current law divides houses and apartments into two groups depending on the year of construction, before or after 1993. The new law will not follow this rule, but will calculate the tax depending on the area a residence is located in. Homeowners owning estates anywhere in Albania, except Tirana, will have to pay ALL12-24 per square meter. Tirana homeowners, who own residences inside the ring road, will pay ALL 65 per square meter, while those owning houses outside of this area will pay ALL 45 per square.
The compilers of the bill said the new criterion attempts to eliminate the practically impossible categorization of residencies into pre- and post-1993 buildings. The government expects to raise revenues of some ALL 4.1 billion annually from the introduction of the new tax structure. Additionally, the bill provides for an increase in the tax for the effect on infrastructure. Construction companies building everywhere but Tirana will have to pay taxes of two to four percent of their investment, while those building in the capital will be taxed at six percent of their investment. The state treasury expects ALL 2.8 billion to be collected from these taxes.
The construction industry is opposed to the bill, saying the consequences would be harmful to their businesses. The increase that the bill proposes, together with the general hike in prices, will slow down the pace of new construction. Furthermore, the businessmen working in this sector say they fear many companies will be forced into bankruptcy.
The government supports the draft by saying all interest groups were involved in the writing of the bill. “Representatives of the government, of the City of Tirana, and of the Ministry of Finances took part in the compiling of the draft,” said Petraq Milo, advisor to the Council of Ministers.
The opposition Socialists attacked the draft and said they could not vote due to a lack of information. “From the information that we received, the representatives of the municipalities did not ask for an increase of the taxes, as the Ministry of Finances claims,” said Arben Malaj, Vice-chair of the Economy Commission. In response to the socialists’ remark, Deputy Minister of Finances, Florjon Mima, said that the proposal for an increase came directly from the Mayor of Tirana, Edi Rama. In disbelief, the Socialist members of the commission asked for a hearing with City representatives to clarify some details.
“Apparently, the opposition is taking back its proposals for changes in the local tax system, but the majority will go ahead with the reforms in local governance, although we don’t have a majority in the municipalities,” said Edmond Spaho, Chair of the Committee.
Milo said the draft is part of the reforms for the decentralization of power. The new taxes would increase the revenues of the municipalities by bringing in more money. All money coming from these taxes would go to local governments, Milo said. Together with the infrastructure and residence taxes, taxes on fishing and agriculture will also be under the jurisdiction of local authorities.
