TIRANA, Oct. 10, 2022 – The Socialist Party will push its proposed fiscal amnesty through parliament despite strong opposition from Albania’s international partners and domestic actors, the party’s parliamentary leader, Taulant Balla, said on Monday.
Balla said that the party’s consultations with Albanians showed that two thirds support the amnesty and that the infusion of funds it would bring would be good for the country.
“Fiscal amnesty is necessary for Albania to move to another stage,” Balla said, adding authorities would work to exclude funds tied to crime, corruption and politics. “Most of the countries of the European Union have done this. We will approve the fiscal amnesty. Every member of the parliament of Albania must understand that this is a good thing for the future of the country.”
IMF joins opposition to proposed fiscal amnesty
EU and other international and American officials have made it clear, however, that the amnesty could jeopardize Albania’s credibility on money laundering and ultimately its application to become a member of the European Union.
The International Monetary Fund joined the long list of international actors opposing the amnesty on Monday.
The amnesty would damage the morale of regular taxpayers and appears like an approving nod to tax evaders, according to the head of an IMF mission to Albania, who was speaking at a press conference on Monday.
“We reviewed the proposed law on fiscal amnesty issued for public consultation in June … [and it] can be considered as a ‘get out of jail’ card for large tax evaders because it includes a substantial tax forgiveness, in addition to the complete waiver of interest and penalties and the granting of effective immunity from prosecution and further inspection by law enforcement as to the source of the funds to be amnestied. The government should replace the fiscal amnesty with a voluntary declaration program, which does not exempt them from all tax obligations,” said IMF’s Yan Sun in Tirana.
EU negotiators had earlier also expressed “serious concerns” at their June meeting with Albanian counterparts, saying the initiative “would weaken Albania’s anti-money laundering controls, while doing little to increase the capacity of the tax administration to improve future compliance with tax requirements.”
They added the proposed amnesty “raises serious concerns for member states of the EU and other partners, as well as a substantial reputational risk for the country.”
Political opposition says PM working to help criminal underworld
The amnesty, proposed by Prime Minister Edi Rama, would legalize funds for individuals who declare up to 2 million euros in cash assets, taxed at 7 to 10 percent, without having to disclose the origin of the money. Those who go through the process would be guaranteed protection from any criminal or administrative penalties related to not having declared the assets and their origin.
According to Rama, the goal is to get the funds saved by hard working Albanian mirants abroad into the Albanian economy, while critics say it’s a way to increase funds of illicit origins into the economy.
Opposition leader Sali Berisha said last week the amnesty has nothing to do with the money of Albanian migrants, but rather is a product of lobbying from the criminal underworld.
Berisha added Rama doesn’t have the necessary votes in parliament and that’s why they are pushing.
“MPs who vote for Edi Rama’s fiscal amnesty vote for crime and only crime. Rama does not have the votes for the amnesty, and he is entirely lobbying on behalf of the underworld,” Berisha said in a press conference.
The political opposition is officially against the proposal, but there are worries some MPs might act independently to support the initiative, which would further fracture an already deeply divided opposition.
Local and international experts have for months raised concern the amnesty would benefit individuals in possession of funds coming from criminal or otherwise illegal activities.
Albanian officials who came up with the draft law have failed to explain the math of how migrants working cash jobs, most of which don’t pay much, can build up assets of up to 2 million euros with their savings.
Strong questions have also been raised about the ability of the institutions to prevent members of criminal networks from benefiting from this initiative, despite the established restrictions on paper.
Proposed amnesty already making Tirana homes more unaffordable
Tirana’s red hot real estate market — which is now completely unaffordable to the resident making an average income — is being further fueled by the idea that the fiscal amnesty will happen and bring a massive infusion of funds, experts say.
Tirana’s home prices have increased 40 percent in a year, more than they have in a decade as fears of borrowing rates going up and gray funding coming in.
In addition to the increase in construction costs, the expectation that there will be fiscal amnesty is contributing to the higher prices, according to Ylli Sula, CEO at Çelësi media group, the largest publisher of home listings in Albania.
“The apartment prices are high because construction companies expect the effects of the fiscal amnesty, that those who have informal cash will invest,” he told local media, adding that because interest rates in the banks for savings have been very low, everyone will rush to buy real estate.
