TIRANA, April 28 – The nationwide campaign against informality launched in late 2015 seems to have temporarily put public finances back on track. Finance ministry data shows government revenue rose by an annual 10.5 percent to about 96 billion lek (€684 million) in the first quarter of this year after thousands of businesses previously operating informally were registered with the tax authorities in the second half of 2015.
The key value added tax, levied at a fixed 20 percent rate on almost all goods and services and accounting for a third of government revenue, rose by 10.7 percent in the first quarter of this year.
Excise duties also rose by 21.7 percent due to higher imports of fuel and tobacco. However, the government maintained a tight spending policy with public investment dropping by 18.5 percent to 7.2 billion lek (€51.4 million) as the government targets to bring down public debt to 70.9 percent of the GDP this year, down from a record 72.5 percent in 2015.
The government says some 47,000 businesses previously operating informally registered with authorities and 83,000 workers were lifted out of informality in the past seven months, figures which poorly reflect the modest 10 percent increase in revenues in the first quarter of this year.
The campaign against informality, accompanied by legal changes with tougher penalties, was criticized because of focusing on small businesses and repeated field inspections not helping improve the business climate.
