PM praises 2011 performance, warns to fight informality

TIRANA, March 2 – Prime Minister Sali Berisha says the unprecedented double digit increase in revenues registered in the first two months of this year and the boom of Made in Albania exports is an indicator of the country’s vibrant economic growth and will allow government to increase wages and pensions for 800,000 families in mid-2011. Speaking at a government meeting on Wednesday, PM Berisha said budget revenues in the first two months of 2011 had increased by 12 percent year-on-year while Made in Albania exports rose 150 percent.
This year, government has planned an 11 percent growth in revenues, 2 percent more than under the revised 2010 budget, to achieve a 5.5 percent GDP growth rate.
Speaking of the informality rate, Berisha warned that unlicensed business owners would be stripped of their right to start a business for at least a five-year period, demanding the necessary changes in the tax procedures Code to revoke licences.
Addressing economy Minister Nasip Naco, Berisha said that oil traders who are caught selling banned high sulphur diesel will have their licences revoked under the new proposed changes.
Berisha also suggested that construction permits, which according to him in the Tirana Municipality take 383 days to obtain ranking the Albanian capital the world’s third from bottom, should be included in the one-stop shops, a practice applied in 21 countries.
The Prime Minister also reiterated his stance to review the tax on the sale of used cars saying that the current tax had blocked the market, calling on the Transport Ministry to find a suitable solution respecting both the environment and the market.
Since mid 2010 when a new law entered into force, the sale of cars under legal contracts has been in decline and car owners are using authorization or donation practices to sell their cars following the increase in taxes.
Finance Ministry data show the tax on sale of used cars fell by 7.2 percent.
Last summer, used car prices registered an increase of 5 to 20 percent following the entry into force of a new tax imposed on their resale within the country in mid-2010.
The tax is based on the car’s engine’s horsepower, years of usage from the moment the customs duty has been paid, and the kind of fuel it uses.
Berisha also told Finance Minister Ridvan Bode to start drafting the legal framework for the implementation of a fiscal amnesty including even old debts.
Finance Minister Ridvan Bode reiterated two months ago government’s stance in favour of carrying out the tax amnesty as a very positive measure for the country’s economy and financial system. However, he said the amnesty cannot be implemented without the opposition’s consent because the bill requires a qualified majority of 84 votes. According to Bode, the approval of the bill would first require the amendment of the country’s Criminal Code and that’s why government cannot implement the reform under a simple majority vote. Bode said that the legalization of the informal business would produce positive results for the economy, unfreezing some USD $3 billion. The opposition and some experts are also skeptical of the reform the Albanian government wants to make, considering it an effort and good opportunity to collect money in a time of crisis.
The International Monetary Fund has warned that a tax amnesty should nevertheless be only considered as a last resort, as it threatens to undermine future tax compliance and the credibility of the tax system.