Experts support tax raise for crisis

The former Socialist Finance Minister, Arben Malaj, says that the crisis cannot stop only with a forced limitation of expenses, but it also imposes a tax review.

“What taxes should be raised and how much of the expected revenue growth will come from a better administration, the fight against corruption and division of procedures. This is not an easy debate”, declared the former Minister, Arben Malaj.

The option for a soft tax review has the support of the Democratic Party MP, Selami Xhepa, but only after economy recovers from the crisis.

“The absolute priority for the moment is to increase the tax system administration efficiency equal to the current tax levels. In a more midterm period, when the crisis might have passed, we can consider a readjustment of the tax levels, so that we can permanently create higher additional revenues”, Xhepa declared.

Another argument why experts support a tax raise is that the poor are the ones to hold the entire heavy burden of this crisis, if expenses are cut even further.

“Facing a tough situation requires that the burden should be carried in a more equal manner and together with some part of the population, with those affected by unchanged wages and those who are affected by social funds. Businessmen should also be part of the contribution, so that cuts will not be deeper as poverty increases and social cohesion is severely damaged. Secondly and most importantly, the business benefits even more by improving the country’s public financial stability”, Malaj declared.

The Albanian government spends an average of 27-30% of the GDP through the budget. Selami Xhepa says that the great need for public investments and social policies may require a slightly higher level of spending and thus higher taxes.

“I think that a spending level with 30-35% of the GDP is more than sufficient for Albania. It accommodates not only public investment programs, but also addresses social concerns and social welfare programs. As such, a tax system that corresponds to these public spending levels would be affordable by the private sector, ” Xhepa declared.

“The government failed with the low tax philosophy. The fact that the economy was unable to recover even with a 10% flat tax, which is among the lowest, means that the problems of the Albanian economy are structural reforms, good governing, fight against corruption, efficiency of public administration, the right to property and independence of the judiciary. On the other hand, a very low tax that converts to a higher debt is not better for the economy. We need better studied tax levels”, Malaj declared.

Three days ago, the IMF urged the government to review taxes since the current level does not guarantee financial stability.

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