Economic Amnesty: Trick or Cure?
24 January, 2013
Economic Amnesty: Trick or Cure?
Economic amnesty and decriminalization of economic crimes, suggested by President of Georgia, seems to be aimed more at saving the once protected businesses, than curing the Georgian economy. The first legislative initiatives of Mikheil Saakashvili, President of Georgia, that suggests to the new government to implement economic amnesty exempting tax arrears accumulated until 2013, on the one hand, and forgive economic crimes on the other hand in order to avoid preventive detentions of economic criminals seem to fall flat. New
government believes it has already implemented sufficient liberal changes in the tax law and neither economic amnesty nor decriminalization is necessary at the moment.
Georgian President based on regular information provided by National Bank of Georgia (NBG) reported media on January 17, 2013, that Georgian economy faces alarming slow down as investments shrank, forecast of economic growth for coming three years dropped from 8 to 6% and business activity became sluggish. Earlier, on January 15, Vano Merabishvili, the ex-premier and now General Secretary of the ex-ruling political party National Movement, expressed his fears that a budgetary crisis launched in Georgia due to same economic slow-down. Trade reduced and debt figures increased to businesses.
“And the key problem is that government has no clear action plan,” Merabishvili stated.
Saakashvili, appalled by the situation, prescribed so called economic amnesty and decriminalization to aid Georgian business to rally as his government did after Rose Revolution of 2003.
“We need not go far for the recipes, in 2004 after Rose Revolution my government declared an economic amnesty and I suggest now taking into account the emergency case in the economy to amnesty all tax and economic arrears that entrepreneurs accrued until 2013. In parallel to implement decriminalization of economic crimes lest use detention sanctions on economic crime and preventive detentions first of all. This is my first legislative initiative,” His Excellency stated on January 17.
Government responded that neither economic amnesty nor decriminalization is planned as they are redundant against the backdrop of the already implemented liberal changes in tax law specifically from point of view of tax administration and arrears as well as improvements in the Tax Dispute Council mechanism. Besides, budget of December of 2012 was fulfilled by 102% of excess and no planned state projects are suspended or halted.
According to the latest available statistics, economy slowed down since October of 2012 in fact: Real economic growth reduced to 5.5% from 8.8%, 6.5% and 7% of July, August and September of 2012 respectively. However, economic analysts ascribe it to traditional election effect connected with the Parliamentary election of October 1st, 2012 when Georgian Dream political coalition won power to National Movement. Uncertainty related with the power change always affects economic activity, sector pundits say. Besides, January traditionally is a passive month from economic activity point of view.
According to Giorgi Kadagidze, President of the NBG, the preliminary data shows a drop in demand on economic activity however as January is a passive month generally, the final conclusion whether or not this is a fundamental macroeconomic tendency or a seasonal factor will be made after monitoring of coming three months.
“Business environment in the country is much better today than it was before October 1st,” Soso Archvadze, an economic analyst, said. “And there is no need for any extra remedy like amnesty.”
As a matter of fact, new government that took its office term by end of past October, has already implemented around 16 changes in the tax law to make administration of tax arrears and tax-related disputes more liberal. Some penalties were more than halved, and some cut down by four-fold. Besides, the tax arrears payment deadline was postponed by 3 years instead of the currently active one-year. Government pledges to go ahead with more liberal steps that make amnesty completely unnecessary.
“Amnesty may have only negative impact and lead to budgetary crisis if all tax arrears will be exempted. As to alleged economic blunders and crimes they should be settled through courts,” Archvadze recommends.
Demur Giorkhelidze, an economic analyst cooperating with Georgian Dream, thinks an economic amnesty and decriminalization have a sense if the target beneficiaries will be classified.
“Crackdown on business was so big during the previous government that some business had just no other way out than to go on some economic blunders that cannot be assessed as economic crimes. They should be excused. But the monopolist groups who enjoyed ex-governmental support and have been taking super-profit should not be exempted,” He said.
Ditrikh Muller, a co-founder of Georgian Investment Group, categorically discards any kinds of amnesty and decriminalization idea. He believes this sort of taxation preferences falls only in interest of the business protected by ex-ruling National Movement as only protected companies managed to accrue tax liabilities. According to him, classification of who was a real criminal and who just committed an economic blunder will take a lot of time and the dispute is better to be settled via court rather than through tax preferences. Besides, frequent amnesties like once per 8 years plus exclusive tax-exemptions erasing millions from national TV channels in 2010 including GEL 36 million of Rustavi 2 and Imedi both National-favorites, will boost the impunity syndrome in the country that unpaid taxes can be excused. By the way Rustavi 2 and Imedi accrued GEL 5.5 million and GEL 13.9 million since 2010 to 2013 again. The so called opposition TV channels such as Kavkasia and Maestro meantime owe no taxes and enjoyed no amnesty but only pressure, their owners assure.
“Another amnesty means that Saakashvili’s government was so bad during 8 years that the economy got so much criminalized that it needs an amnesty now. There was such a big pressure on unprotected business during National’s authority that I doubt whether anyone but protected companies eluded taxes. All unprotected ones were law-obedient tax-payers and that’s pretty unfair now to exempt those who did not pay. President just tries to save the businesses that were under protection of Nationals before,” Muller said
Print
Other Stories
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
21.04.2019
22.04.2019
USD
1
USD
2.6935
2.6935
EUR
1
EUR
3.0291
3.0291
GBP
1
GBP
3.5021
3.5021
RUB
100
RUB
4.2126
4.2126
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6935
EUR
1
EUR
3.0291
GBP
1
GBP
3.5021
RUB
100
RUB
4.2126
April 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30