Witch-hunt on petty business goes ahead
28 October, 2010
Witch-hunt on petty business goes ahead

Petty traders of so called Lilo Bazroba located in the outskirts of Georgian capital protest against the crack-down practiced by the Revenue Service.

Georgian experts agree that not everything is smooth and fine among petty traders but they suspect that Georgian tax service misuses its authority and resorts to inadequate measures.
Georgian Revenue Department at the Ministry of Finances of Georgia (MOF) decided to get over all kinds of contraband and financial crime in this October.
Shortly after mass arrest of

petty traders in the center of Tbilisi, Kidobani and Passage market malls [staged on October 5, 2010] Georgian tax officers deployed another crusading campaign against tax-felony at the biggest marketplace of Tbilisi dubbed as Lilo Bazroba where about 3700 petty traders run their business.


About 300 petty traders running counters at Lilo appealed to the Trade Union [of self-employees and petty traders employed in trade and individual business] for help on October 21, 2010. The offended traders claimed that the tax-inspection locked bigger part of shops during its regular check of the market causing a big agitation that stumbled the working process of the entire market including honest tax-payers.
The problem is that some traders whose shops were closed were taken under custody that morning that led to hand-in-hand combat with the police.  Oppositionist Political parties also were involved in the battle and all ended in a big mishmash ultimately rather aggravating than discharging the situation at Lilo market.

Due to price hike on products the purchase power of population reduced and people avoid extra expenses and focus on food mainly while the bigger part of Lilo traders trade by clothes, shoes, and underwear. And the unpleasant circumstances affected the yet reduced turnover of clients at the “crime spot”. Clients shun the place that swarms with agitated people and police officers, the concerned Lilo traders claimed in their appeal.  As a result the trade activity dropped badly affecting incomes of traders who scarcely make two ends meet and have to pay off banking loans. 
“In case if the honest self-employees are deprived of a chance to continue their activity the Union will protect their rights via legal means,” The Trade Union official announcement paper reads.
According to Georgian Journal’s incognito source, contraband is still a serious problem to Georgian government specifically at Azeri border and 90% of contraband having passed across this border   goes to Lilo Bazroba actually. And very likely government decided to crack on shadow business at Lilo and bleach it all in all.
Giorgi Tskhakaia, Head of the Revenue Department, refused accusations that someone was arrested at Lilo. He assures that the tax service has just been implementing a regular inventory based on the request of Kutaisi traders who claimed that they cannot get the goods ordered at Lilo for they lack due papers attached to the procured stuff. He eluded direct comments respective the presumption that Lilo swarms with contraband. Top revenue service official just elaborated that they combat contraband.
“We decided to implement a control purchase at Lilo and found out that many of the traders lacked due documentation of [imported] goods, they could not present  bills of lading  and we closed the suspicious shops for  inventory for 2 days as the law envisages. That’s the full story,” Tskhakaia told Georgian Journal on October 22, the next day of the “tax crusading” campaign disturbed Lilo inmates and assured that all is still and calm at Lilo. However about 3 thousand traders went on protestation strike that day to express their sympathy to offended colleges and demanded fixed taxes lest avoid crack down of tax service in future.
Economic analysts do not rule out that the locked businesses really practiced contraband or eluded taxes and that this kind of illegal practice must be punished, but they believe tax-service misuses its power.

“May be there are some unregistered goods at Lilo that must subdue to legal administration and registration but government should not implement preventive measures on the expense of law-abiding tax-payers. The recent confusion at Lilo affected honest traders,” Davit Narmania, an economic analyst with the Center for Economic Policy Research, explained to Georgian Journal.
He believes that the double-interpretation of tax code lays ground to misunderstanding and confusion and that should be retrieved if the state really wants to regulate situation and enable business to work.
“There should be clearly written [in the tax code] when the state has a right to check business, how often, and when the emergency checking is admitted. And the business would be aware that if one does not pay due taxes you are supposed to be checked. This is not only Lilo problem, this is a legislative gap,” Narmania elaborates.

Levan Kalandadze, Executive Director of Georgian Small and Medium Business Association, thinks that government needs to make difference between the petty financial felonies from criminal case.
“I do not doubt that some people elude taxes or lack some due papers, but it is not a criminal case and can be settled via penalty at place without much noise rather than take the culprit under custody as a criminal,” He said. “The financial crimes must be classified properly and preventive measures be adequate, nothing more.”
Gia Khukhashvili, an economic analyst, thinks government practices a crack-down on petty business as far as big business been lobbied by government, sees a competitor in small business.

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