Taxpaying Reform or the Privilege

FROM THE REDACTION

The government of Georgia presented taxpaying lowing and simplify project of several taxes for 2008, which includes profit tax coming down to 15% up from 20%. Income taxes will be amalgamated with social taxes and become 12% + 20% (within 29.6%) – 25%.

Social and income taxpaying administration has simplified already and united one form which must be received by the taxpaying department.
What do we expect from this? Will affect of the investitions attraction and increase production or employment level? After new tax code was enforced, with its many blanks and afterward regulatory instructions (what ought to be considered as a positively made step as a result) the Finance Ministry believed affective that “the private investitions number grow with 39 %, GDP with –9.4, taxpaying incomes doubly and newly registries taxpayer number increased with 31 %.
What is the deserve of the tax code? Maybe a little, because most part of investitions include Baku- Ceyhan and Kazakhian investors, what is not just directly related to tax code and some other the same sort of projects. Tax incomes number increasing is related to the political will and straightened administrating, but not to simplify code and increasing of GDP basically. And new forms of named factors including taxpayers number increasing is a deserve of several paragraphs and not of business activity growth.
Why we make reference on the circumstance? Because we believe lots of issues of the project ought to be defined, such as budget arrangement issue among the central budget and the local budget, income tax reducing, which included 425 million before, and who` s expenditure it will become, locally or central? The idea of investitions attacking for the budgetary incomes reducing up to zero point, as it` s going on in Estonia and dividend paying number getting 25 %, sounds good. That would maintain capitalization and provide background for partly creaking down on unemployment level, that would really be motivation for boosting investitions according its modern understanding. There is a sharplyraisin question concerning social taxes reforms and existed social aid, pension found and ect. reforms, and that is clear fact the government is not able 120 lari pensions giving out what is the similar number to minimal wage of existence level. What makes pensioners unsatisfied from one hand and troubleshooting the government form the other hand, the same goes concerning refugees` and needy. It` s natural that the only one way out –transition on private pension funds and insurance medicine. Why the sphere is not developing? The reason is the expenses of the goal are not mentioned as expenditures and the social taxpaying is not passing under separation of state and private funds. The situation will not be regulated until the named problems will be able to come to the end. That` s clear for everyone, the main is it` s description way in the project itself and what it` s highlight in reality, when income and social taxes are united into one.
–Why do we worth the people` s condition who are not obliged social taxpaying? For instance, foreign embassies ` and projects` employees, lessees, which are just income taxpayers, what we are claim from them? Finance Minister of Georgia Lekso Aleksishvili told that these people would be 2-3 years privileged and will pay 25 % despite of today` s 12 % after the privilege annulling date.
I believe the issue needs complementary overview.
Interesting is taxpaying schemes of our neighbor countries and Baltic States, suggested by the Ministry of Finance:
Baltic States face vary interesting taxpaying scheme, directed to the big business development maintain and attraction of investors. The Azerbaijan just facing taxes collection. No sort of privileges mentioned in Turkey, concerned to big investors privileges, especially in tourism and technology spheres. So, our taxpaying scheme ought to be seriously privileged for gaining victory while battling for the investors, astelling simply, to take away investors from neighbors and entice into our country. In the case of the amendments making in the scheme it should be change in its context for the reform goal and the outcome to be achieved. To create presumable screen –including both, pessimistic and optimistic points, while talking about budgetary incomes increase up till 2010.
While talking about GDP growth, the World Bank prognoses checking should be a good idea for pessimistic screen coming across. Why? For more comparable screen creating possibility, for instance income taxes making 25 % in 2008, 20 % in 2009 and 18 % in 2010.
Income tax zero point making and 25 % of dividends in 2008 and 20 % in 2009. 30 % of wages cut to be transferred into private pension funds and insurance companies, ect.
I guess the issues need to be debated, for serious investing and employment effect reaching, together with fiscal one.