Legalizing Money Extortion at Bazroba
27 October, 2011
Legalizing Money Extortion at Bazroba

To better handle tax administration at market places, the government plans by means of shifting the load of tax administration from the taxation organ to the market management, thus creating the risks of legalizing money extortion. 

Changes in the tax code, aimed at improving of the control over much talked about Bazrobas [big market places encompassing shopping malls and open counters of petty traders] are already worked out and scheduled to go through parliamentary procedures soon, Gia Khuroshvili, Parliamentary Secretary of

Georgian government, informed media on October 17, 2011.

According to the changes, special trade zones will be created at Bazrobs, where trade will be “centralized”; traders will be exempted from tax-related paper-work and the owner of Bazroba will be responsible for all taxes due to the tax administration of Georgia.

According to Khuroshvili, this kind of changes are expected to improve regulation of much talked about issues of Bazrobas [petty traders find tax calculation burdensome and require fixed taxes instead, to escape intricate tricks of tax officers]. The Government understands that tax-related paperwork is difficult for Bazroba traders and relieves them from this task within the special trade zones.

Status of special trade zone will be granted to a legal entity carrying out organized trade [that means renting counters and accommodations for trade] either under its own or governmental initiative.

Changes oblige Bazroba management to insure protection marking of traded goods and cash administration of sold product through cheque-registers so as traders have no connection with the cash. Goods will be stored at warehouse and be marked by Universal Product Code (UPC) and consumers will pay for the purchased good at a centralized check-register.

By the end of the day Bazroba management will deduct 3% of the traded sum while the remainder 97% will be returned to the trader who will be exempted from profit tax, declaration of Value Added Tax as well as handling with extra paper-work.

Bazrobas will go on new regulation gradually within reasonable timetables which will be defined prior to the third parliamentary hearing of the bill on changes.

Some economic analysts think the upcoming changes ease burden to tax administration alone on expense of Bazroba management and traders as far as the taxation body is relieved from tax administration burden that falls within its competence actually [tax-officers are paid from the state budget for that] and this burden is relied on Bazroba management that is not responsible for tax administration and to it this new responsibility means just extra outlays and a headache.

“Bazroba management needs additional financial and personal resources to insure tax calculation and administration that increases its expenses. And to reimburse the loss they most probably will increase rent rates to traders thus jacking prices up,” Davit Narmania, Board Chairman of the Center for Economic Problems Research, explains. “It is good news to tax administration alone since they will be paid similar salary and working less.”

According to Levan Kalandadze, an economic analyst, by this here novelty government legalizes outrage of money extortion in fact at Bazrobas.

“This change relies tax administering responsibility on the person who bears no responsibility for this since Bazroba management is just a mediation chain, it has no tools to insure tax administration even if it hires an independent tax audit because it cannot interfere in relationship of audit and trader who knows how real things are standing on and how the sales go on in fact. Besides since traders will know that they are exempted from responsibilities against tax body they will be tricking since Bazroba management bears responsibility for infringements. Where is the logic that the one who trades and makes blunders is free from responsibilities and an innocent person should bear responsibility for the action it did not commit?” Kalandadze asks.

Economic analysts believe government introduces this novelty since it is easier to press on one person rather than on multitude of traders who can rally in case of discontent and aggravate the social picture in the pre-election period.

“It means that if a trader makes a tax-evasion or blunder government will be extorting money from Bazroba owners. On the other hand the latter to compensate the loss will be pressing on traders through diverse and higher rent rates or something else. Government gives a cart blanche to Bazroba owners meaning: get money through fair means or fowl and pay to me, this is legalization of money extortion,”  Kalandadze said.

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