TIRANA, Nov. 17 – With seven months to go before Albania holds its new general elections, the opposition Democratic Party has finalized its electoral platform that is based on sharply lower taxes that would turn Albania from a country with the second highest tax rate in the Western Balkans region into one with the lowest tax burden among the six EU aspirant regional countries in a bid to boost foreign investment and domestic consumption.
Opposition Democratic Party leader Lulzim Basha says the program offers a 9 percent flat tax on personal and corporate income, compared to a current 15 percent rate on the corporate income tax and the withholding tax on dividends, rents and capital gains, and a reduction in the key value added tax by 5 percent to 15 percent.
“Our government’s taxes will always make up the smallest part in household and enterprise costs and will completely turn to their service. This means lower taxes, a 9 percent flat tax and a 15 percent VAT,” Basha has said concluding the Democratic Party’s economic development program drafted in cooperation with German experts of the Christian Democratic Union and the Konrad Adenauer Foundation.
The opposition takes to the upcoming mid-2017 elections after two consecutive heavy defeats in the 2013 general elections and 2015 locals and most recently in the by-election for the Dibra Municipality after its former Socialist Mayor was dismissed following abuse of power, losses which the Democrats have attributed to alleged vote-buying practices.
The center right opposition Democrats, who have ruled the country from 1992 to 1997, soon after the country’s communist regime collapsed and from 2015 to 2013, currently occupy only about a third of the 140 seat Parliament dominated by the Socialist Party and its junior ally, the Socialist Movement for Integration.
Lulzim Basha, who in 2013 succeeded Sali Berisha as Democratic Party leader, says the opposition’s program will offer less arbitrary and arrogant government and much more individual freedoms, describing the newly drafted program as realistic and feasible.
“We shared the same stance and orientation with the German experts that we have to restore faith in politics as an instrument of changing the citizens’ lives, restoring faith in democratic institutions, faith in freedom and free enterprise as a necessity to bring back strong economic growth as the only generator of welfare, employment and development,” says Basha.
According to him, the current luxury spending the government makes on office furniture, cars and trips cost Albania up to $130 million a year, an amount which he says is equal to the creation of 50,000 jobs at a minimum wage.
The opposition leader also describes the country’s crime and drugs situation as unprecedented triggered by what he calls the collapse of free and fair elections.
“I would like to guarantee every Albanian citizen that while this vital challenge, democracy, i.e. free and fair elections, decriminalization, the fight against crime and drugs remain the focus of our opposition action, we are also assuming our responsibilities as an opposition force and tomorrow’s alternative to unveil to Albanians not only denunciations with facts and arguments but also the ways out,” he adds.
Florion Mima, an opposition Democratic Party MP and head of the party’s economy department, is optimistic reducing VAT by 5 percentage points will trigger a decline in product and service prices and fuel a sharp increase in consumption.
“There’s an agreement between tax administrators and tax policy drafters that if you lower VAT by 0.5 or 1 percentage point with the target of having an impact on final prices of goods and services, better not undertake that step as its impact on reducing prices would be zero. But if the decrease is substantial as in our case, of course prices of goods and services will drop making consumption reach to levels unknown before,” says Mima.
The opposition’s economic platform also envisages reducing budget spending to below 31 percent of the GDP, returning public debt to 60 percent of the GDP, providing Euro 100 million in subsidies to farmers and an annual $400 million in infrastructure investments.
Back in the 2013 general elections, the then-opposition Socialists also focused their electoral campaign on promises of lower taxes and fighting corruption. However, almost four years on, they have failed to deliver on several key promises and some of the key taxes such as the corporate income and the withholding tax on dividends rents and capital gains have increased by 5 percent to 15 percent, making Albania’s tax burden one of the region’s highest and ranking taxes as the top concern for the business community.
At 36.5 percent of profit, Albania’s total tax rate is slightly lower only compared to Serbia’s 39.7 percent among EU aspirant Western Balkans countries, according to the latest World Bank’s Doing Business report.
