In the cramp of budgetary incomes
While the government strategy 2013-2017 provides for an increase of incomes (which were in continuous drop during the period 2010-2013), and at the same time the government increased several important taxes, the budgetary incomes have cramped in only 0.3% increase (reporter.al)compared to the same period of previous year. Furthermore, totally in contrary with the promises mentioned in the governing program for this mandate, the government expenses are increased with 6%. In this situation which logically is in discordance with financial predictions of economic growth, we may allude that the either the government is expecting a surprising and constructive grant, or a drastically change in the financial management will happen the second part of the year.
However, Minister Cani, in each of his public appearances, looks optimistic for the situation and for the future positive effects that the reforms will bring. With a surprising calmness, he pretends that all these results are within their expectations, and for these reasons the 2015 plan is lower compared to 2014 plan. The Minister congratulates the work done by the customs and tax authorities, and their lower incomes collected case are addressed: in the first, to the problems with the mineral rent, with the world oil price and with the “anti-smoking” campaign; while in the second case, the problem is only temporarily due to the new online tax system.
Customs in focus
The decrease of incomes collected, the resignation of Elisa Spiropali, and the poor performance of the English consultancy agency, Crown Agents, have been more than enough reasons to make customs the main financial focus of the month.
During a Saturday when Albania was celebrating the Teacher’s Day, on March 7th, all the televisions where transmitting the news of the resignation of the Custom’s Director, and the command in this position of the current Vice Minister of Finances, Mrs. Irena Beqiraj. Taking in consideration that it was not appointed a new director, it looks like the resignation was unexpected. Although, the reason that Spiropali gave – coming in life of her first child, was a fact known from months. However hand there were from sometimes ago rumors that she would be fired for not meeting the performance expectations. Moreover, the command of Mrs. Beqiraj, who actually keeps both job positions, makes it difficult for her to do the best; thus it shouldn’t be long when a new director will be appointed.
On the other hand, the performance of Crown Agent has been far from brilliant. In a time when the incomes from the customs in 2014 where expected to be 4% of the Gross Domestic Product (GDP), reporter.al reports that this figure is only 0.4% of GDP – showing that the strategy of tax increase of the government, and the consultancy work of Crown Agents have failed. However, what is even more surprising, is the request of Crown Agent, a company which profits 4,1 million EUR/per year from the Albania, to renew the contract, despite they haven’t fulfilled all its requirements. It will be very surprising if the government will accept to renew this contract, when Mr. Rama himself has admitted to IMF that the Crown Agent’s performance has not been within expectation, and when in the other part Mr. Rama promised in 2013 not allow customs to be in a foreign management. We believe that one bad experience is enough!
Even more debts…
In the government program 2013-2017, is textually mentioned: Economic growth in countries like Albania can be boosted in three ways:
1. Through foreign loans and debts;
2. Through export of raw materials, of similar semi-ready products and a certain category of services;
3. Through economic reconstruction and true structural reforms; increasing with priority the gross domestic product; diversifying products and services; masiv adoption of new technologies.
We judge the first two option to be highly risky and unstable. Basing our economic growth only at foreign investment or loans (which we like to consider as the “peak of success” of each government) means: to elude life and development beyond our concrete opportunities; to be dependable from many influences, deviations and whims of the international financial markets; to produce a not real economic growth, based on foreign currencies which synthetize a structure.
Despite this program’s statement, the government has continued to take foreign loans. Mainly from IMF, which is for now the inspector and manager of our economy, but also from other sources such as World Bank. Voice of Albanias reports that the govermnet will take a loan of 250 million EUR, which according to Minister Cani is a loan with relatively low interests, because it is guaranteed from the World Bank
In a press conference with the Head of IMF Mission in Albania, Nadem Llahi, where this last one expressed optimism for the 3% economic growth of Albania in 2015, Minister Cani declared that there will not be any further increase in taxes. The same thing was claimed also by the current Director of the Customs, Mrs. Beqiraj. However, Albanian Construction Portal, reports that on September the government will increase the tax on immovable property. It is still unknown the aim, the destination and the amount of this tax, but through a simple deduction one can realize that the final price of the buildings will decrease, as a consequence of demand shifting. Most probably, the chains of clerking will be ruined and many construction supplies will bankrupt. Consequently, many construction workers will lose their job, causing bad economic and social effects, which is still unknown if the tax income will be able to cover. At this point it will be needed the protectionist reaction of the government by blocking/stopping new constructions. This is the only response, so that that ones who have bought an apartment costing 100 thousand EUR will not wake up one morning realizing that the value of their apartment is only 30 thousand EUR…
For an Albania that in 2016 will be woke up with no disturbance from gambling. This is the aim of the draft-law “ For gambling in Albania”, which was presented in the Commission for Production Activity on March 18th, 2015. Minister Cani declared the new tax scheme for this sector “Gambling will be excluded from VAT, but the fee for the license will vary from 40 thousand ALL till 1 milliard ALL for the big casinos”. This draft-law includes larger distances between casinos, located outside the cities (mostly in touristic points) and it will applied the register of the players.
It is important to be mentioned that the family will have the right to make a written request to not allow their family member to gamble. We hope that this law will be implemented at the best – according to all the expectations to fight informality, fiscal evasion and social effects.
For more information please refer to the following links (which unfortunately are only in Albanian):
1. Reporter.al. 23 March 2015. The budgetary incomes flounder in only 0.3% more in February. http://www.reporter.al/qeverise-i-ngecin-te-ardhurat-buxhetore-ne-shkurt-vetem-0-3-per-qind-me-shume/
2. InfoPasqyra. 18 March 2015. Cani: Reforms, positive effects in the Albanian economy.http://infopasqyra.com/cani-reformat-efekte-pozitive-ne-ekonomine-shqiptare/news/lajmi/
3. Reporter.al. 23 March 2015. Crown Agents, the expensive consultancy which didn’t brought further incomes. http://www.reporter.al/crown-agents-konsulenca-e-kushtueshme-qe-nuk-solli-te-ardhura-shtese/
4. Albanian Contruction Portal. 26 March 2015. In September the government will apply a new tax on property. http://acp.al/news/730/Ne-shtator-qeveria-do-te-zbatoje-taksen-e-re-mbi-pronen/
5. Albanian Telegraphic Agency. 18 March 2015. Law on gambling. Cani: Objective – the fight against informality.http://www.ata.gov.al/ligji-per-lojrat-e-fatit-ministri-cani-objektiv-luften-kunder-informalitetit-238485.html
6. Shqiptarja.com. 18 March 2015. Law on casino. http://shqiptarja.com/m/home/ligji-p-r-kazinot–cani-familja-k-rkes–q–i-af-rmi-t–mos-lejohet-279551.html
7. Online journal Panorama. 8 March 2015. Resignation of Spiropali. http://www.panorama.com.al/doreheqja-e-spiropalit-cani-uroj-nenen-elise-e-ka-shprehur-qarte-arsyen-bashkepunim-i-shkelqyer/
8. Ministry of Finances. June 2013. Government Program 2013 -2017. http://www.financa.gov.al/al/program/programi-i-qeverise-2013-2017
9. Voice of Albanians-Online. 17 March 2015. Issue of eurobond and further loans. http://www.voal-online.ch/index.php?mod=article&cat=LAJMIIF&article=52851
10. Newspaper Tema. 17 March 2015. Albania continues economic growth. http://www.gazetatema.net/web/2015/03/17/fmn-shqiperia-vijon-rritjen-ekonomike-permiresime-ne-sektorin-energjitik-cani-ska-rritje-taksash-jemi-ne-rrugen-e-duhur/