dr. NODAR KHADURII
Talks about inefficiency of Georgia tax code has started already since September 1997, i.e. soon after it came in force.
Unfortunately, the mentioned criticism hardly has any rationales and real ways of improving the situation.
We think that first of all it is important to answer to the following question: why does a state (Georgia) need tax system and tax code?
Tax system might have at least two most important tasks along with other ones: mobilisation of funds necessary for the existence of state, i.e. fiscal function and regulation of economic processes, which can be reflected in the regulation of economic growth, employment, inflation via tax system.
It is, certainly, clear that the need to choose one of these most important tasks does not rule out a compromise and the possibility to solve the two tasks more or less equally. Yet in different phases of development priorities are attached to either one or another task in various states.
What do we need from Georgian tax system?
The answer to the seemingly simplest question turns out to be quite difficult. We need the following from the Georgian tax system: mobilisation of funds necessary for the existence of state; provision of higher rates of stable economic growth; achievement and preservation of low inflation level, low unemployment, etc. Thus, Georgia should try to receive maximal use from the tax system, i.e. fill the empty treasury, but it should not do so by deteriorating the most important economic parameters.
We should discuss the efficiency of tax code only after solving the mentioned problems even on conceptual level. We think that present more or less serious discussions about the improvement and change of the code is nothing else but waste of time.
Work on optimal tax system should begin soon after the state realised what it awaited from the tax system.
More or less optimal functioning of tax system should depend on the following principles: simplicity, plainness, rate, universality, comprehensiveness, even-haudedness.
Considering the present tax code in accordance with these principles will reveal directions for the improvement of tax code.
Perfect tax system does not exist anywhere as well as in Georgia. However, as mentioned above, this does not mean that it cannot be perfected and that it should undoubtedly be simplified and liberalised.