World Bank demands transparency over tax amnesty

TIRANA, April 4 – While the fiscal amnesty draft law government has approved continues remaining a hot issue, the World Bank suggests that the process should be transparent, credible and done independently.
“It is also important that amnesty is done in such a way that it minimizes moral hazard. Moral hazard is a notion that you can disobey the law, not pay taxes, not be punished and get away with it. It can be managed. For avoiding this, it is important that new cases of behavior which have been amnestied are made impossible through a combination of enforcement, punitive measures and incentives encouraging responsible financial behavior of individuals and companies,” Kseniya Lvovsky, the World Bank country manager told reporters last week.
Economy expert Zef Preci, the director of the Albanian centre for economic research supports the initiative which will unfreeze undeclared assets but says the money collected should go to finance public debt, currently at a record 59.5 percent.
“The money collected from this process should not go to finance the annual budget, but be destined to pay off the public debt, which continues remaining the biggest and most serious threat to the country’s macroeconomic stability,” Preci told Deutsche Welle in the local Albanian service.
While the government is seriously considering making a tax amnesty reform by the end of this year, the opposition Socialist Party, whose votes are determinant to achieve a qualified 3/5 majority that the bill requires is skeptical about the project government has approved ahead of local elections and the periodical precedent it might set.
The Tirana Chamber of Commerce and Industry considers the tariffs government has set for the fiscal amnesty process as very high, saying that any tariff of more than 3 percent is unacceptable.
Government says it intends to implement a full tax amnesty, excluding only businesses connected to current and former public office holders and those whose origin of capital is not legal business.
The Finance Ministry says that the legalization of the informal businesses would produce positive results for the economy, unfreezing some USD $3 billion.
Meanwhile, the business community represented by Konfindustria claims the fiscal amnesty can also be approved under a simple majority vote.
“There is no single case in all EU countries where the fiscal amnesty requires 3/5 of the votes,” says Konfindustria administrator Gjergj Buxhuku.