Albania PM Declares 'War' on Fiscal Evasion

Under pressure from the IMF over falling fiscal revenues, Prime Minister Rama has pledged to engage 600 teams to fight the widespread evasion of the use of receipts for goods – although many see the threat as empty.

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Edi Rama speaking to the media about his campaign against fiscal evasion on 31 August 2015. Photo: Malton Dibra/LSA

Albanians awoke on Tuesday to a new sense of alarm over fiscal bills. Coffee shops scrambled to use cash registers that were installed back in 2010 but rarely used since then. Over the last month, several top officials including the Prime Minister Edi Rama have threatened taxpayers and consumers alike with heavy fines. Owners of small enterprises like tailors and hairdressers have rushed to get registered in the National Business Registry, fearing reprisals.

“The war against informality [over payments] will be the focus of the next 300 days of the government with coordination between customs, tax directorate, labour inspectors and state police, as well as with the prosecutors service, consumers and businesses,” Rama said in a televised speech on Monday.

On Tuesday, Rama reinforced his initiative with another speech, adding that the campaign had been ducked for too long.

“For years, the necessary reforms had been avoided. Now it [Albania] has started to feel like a state. We are starting an operation against the chain of theft that in scientific language is called informality. The will and the attention of the government will be at a maximum. We are at war against informality,” Rama said.

Other officials warned that even consumers could be fined up to 1,000 leks (7.5 euros) if they leave a shop without taking a fiscal bill. However, on Myslym Shyri street, one of the fanciest boulevards for shopping in the capital Tirana, things were running just as usual on Tuesday.

“They haven’t come here,” a shopkeeper told BIRN, referring to the inspectors. He continued selling fruits and vegetables to customers without bothering to print out any bills.

Albania signed a three-year agreement with the International Monetary Fund in 2013, securing cash in exchange for pledges to tighten fiscal discipline. Following the agreement, the government increased taxes on profits, tobacco and fuel, hoping to increase revenues and so close the deficit. This year, however, the higher taxation failed to result in an increase in revenues and the IMF mission ended discussions in June without an agreement, suspending its lending program.

While the government says it will end once forever the high rate of fiscal noncompliance in Albania, many doubt the campaign will bring anything new.

“There are several reasons to doubt whether it will work,” Ornela Liperi, editor-in-chief of Monitor, a weekly economic magazine published in Tirana, said.

“This campaign started well two years after this government came to power but after its experiments with tax hikes, it backfired,” she said.

“The government is also focusing on small businesses that are the main source of self-employment in the country but they don’t have the potential to increase budget revenue,” she added.

“This [campaign] will only divert attention from the true sources of the tax evasion in the country, like traders of tobacco, big employers and big businesses. There is a widespread skepticism about how much the government is willing to do to punish big businesses that have strong political connections,” Liperi concluded.

BIRN

1 September 2015