Tirana Times
TIRANA, Nov. 8 – The Association for Local Government Autonomy, representing some 100 big municipalities and communes led by the opposition Socialist Party, held a protest in front of the parliament building Thursday against the law cutting their taxes for next year. The Association has called on government to withdraw from its cash register bill which under the new changes being discussed in Parliament, obliges local government units to compensate the purchase of cash registers.
In a meeting held last Saturday, the Association described the new changes to the local government tax law, as “an attack violating the Constitution and local government autonomy aimed at sending opposition-led municipalities and communes to bankruptcy and shifting the tax burden of the corruption with cash registers to local government units (LGUs).”
The Association whose members include the country’s biggest municipalities of Tirana, Durres, Vlora, Korca and Elbasan, warned that if the bill gets Parliament’s approval, revenue losses in some municipalities and communes would vary from 90 to 140 percent.
Warning of protests if no solution is found within this week, the Association said the proposed draft law was an escalation of the government attacks on opposition-led municipalities and communes ahead of the May 2011 local elections.
Later this week, the Socialist Party said Finance Minister Ridvan Bode refused meeting representatives of this association headed by Artan Shkembi.
The Association claims the costly cash registers were imposed to businesses by arbitrarily licensed companies, denouncing Prime Minister Sali Berisha efforts to oblige LGUs pay the bills for their compensation.
“The proposed draft law is a continuation of other similar attacks recently, as was the power given to the Finance Minister to block local government budgets at any time and the proposal that businesses with an annual turnover of over 2 million lek pay value added tax (VAT). Speaking at the meeting last weekend, Tirana Mayor and opposition leader Edi Rama described the cash register process as corruptive and anti-democratic aimed at robbing the budgets of municipalities to paralyze and take them hostage ahead of the May 8, 2011 local elections.
“It is not true that small businesses today pay less in taxes than 5 years ago when Prime Minister came to power as the ‘liberator’ of businesses because today they pay 10 percent in flat tax, 20 percent in VAT as well as local government taxes,” said Rama, adding that the tax burden had grown several times compared to five years ago.
Dismissing government claims that the tax burden has lowered, Rama said that taxes had decreased only for big businesses.
The Association’s reaction came one month after a petition addressed to the country’s highest institutions complaining about the high tax burden central government is imposing on them. Speaking in an economic forum on “local government and support to business,” on Monday, Rama said government’s measures to lower tax burden on small businesses were cutting local government revenues in big cities, most of which are led by opposition Socialist Party mayors.
He said that small businesses were the hardest-hit category by what he called the “the economic and democratic crisis.”
Denouncing the cash register and alleged price abuses for their installation, which led government to review the decision postponing it until next year and reimburse them, Rama said the difficult situation the small businesses are experiencing was also a result of frequent legislation changes. According to him, Albania’s tax system has been changed 60 times during the past 5 years, causing problems in entrepreneur-state relations.
The association also demands legal measures fighting unfair competition and the granting of full tax and financial autonomy to all local government units.
Local government revenue dropping
Local government units continued failing to meet their revenues targets, collecting 8.3 percent less, 8.7 billion lek out of the projected 10.2 billion lek during the first nine months of this year compared to the same period in 2009, says the Finance Ministry in its latest analysis of the revenue performance.
Total local government revenues in the first half of this year also dropped to 270 million lek or 3.6 percent less than the same period last year, the Finance Ministry said in a local government budget analysis. Meanwhile, tax revenues also fell to 531 million lek, 7.7 percent less than the January-June period in 2009.
The report said the poor fiscal performance was also affected by failure to approve new budgets by some local government units which had negative effects on investments. Among the municipalities which did not approve their budgets in the first half of 2010 were also those of Tirana and Fier, the country’s biggest.
Cash registers
Government says it will reimburse small business owners for the compulsory installation of cash registers, whose process was delayed until the end of this year following protests by traders over their high prices. In a hearing at the parliamentary economy committee last month, Finance Minister Ridvan Bode said that under the recently approved draft law, traders can benefit up to 44,000 lek (around 440 dollars) in tax compensation for the tax registers whose final installation deadline has been postponed by next December. “This decision was made in consultation with the companies which are authorized to implement the cash register process, by accepting to offer cash registers at reduced prices of 53,000 lek (VAT included) or 44,000 (VAT excluded),” said Bode, adding that all businesses which have installed cash registers or signed contracts until February 28, 2011 will benefit tax compensation.
Reacting to accusations of alleged abuses by opposition Socialist Party officials and local traders, Bode said the cash register prices offered by the four authorized companies were much lower than in regional countries.
