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New Government program and the new fiscal policy: What and why?

by Eduart GJOKUTAJ Basis of fiscal policy would be fair taxation. Relocation of flat taxation policy towards progressive taxation policy, where 'who benefits more, contribute more,' will be the most important movement, to begin a new phase of establishing relations between taxpayers and tax officials, a completely transparent policy and harmonization of interests of groups with different incomes with those of society as a whole, stabilization and improving fiscal policy incompatible with arbitrariness and arrogance of fiscal administration employees

This section is the core and framework of fiscal policy of the new government in Albania. Although the use of the term 'fair taxation' has reference to 'fair tax' system in U.S. federal taxes, in the government program for the next four years the introduction of fair taxation has another meaning. Albanian fair taxation implies a change of mindset redistribution of the tax burden, through setting a new structure of model of personal income tax in coordination with consumer tax rates, taking into account the harmonization of income in different social strata.

On the other hand, fair taxation model that takes a role of changing mentality will prevent and will cure the older model of fiscal management, based to the 'flat tax' model. With this modeling of fiscal system is expected to begin in the following year's budget to halt his negative balance, but also to take a breath the public confidence in the model.

But is there, the place and time for comments and suggestions? I hope so.

Although current tax rates on personal income and profit from the activity are low and competitive in the region, by an analysis of the AL-Tax Center related public expenditure

planning of the budget shows that, orientation of fiscal system should first try to follow models of fiscal policy of narrowing of most present tax gap (VAT and payroll tax) that both they are currently leading the list of tax gap, since are very important for the budget revenues.

A well-adopted policy for the administrative capacities in the tracks of narrowing the tax evasion is the more effective regulator in terms of preserving the columns of fiscal policy, for equality among the contributors to the budget and to aid to transparency and consolidation of government revenues.

In the government program, it turns out that fiscal management has not been productive from the aspect of a failure of his mission. The fact is that the guarantee of public expenditures according to the budget law in the last three years is met under the level of 100%.

Fiscal Efficiency and efficient collection of the fiscal contributions that each citizen should pay is closely linked to the theme of fiscal culture and informality and tax evasion.

It would be very valuable for the new fiscal policy to find broad-based consensus on citizens through conversations and other forms of communication channels. Expansion of existing communication channels and opening new channels with citizens and stakeholders is an important step to build a better image combining all the elements of experience from the taxpayers services to the needs and demands of citizens. A solution of combating the informal economy and diverse tax evasion is anticipated by the program of government to begin building a more active front, better manageable and consolidated in response to future developments that are expected to occur. This front is organizing the fiscal revenue administration agencies in a format within a solid fiscal administration with two main wings (a) central-local tax and (b) with a custom relevant management board, responsible for fiscal revenues management of the country. The strengths that come from this merger are clearly identified by the program and this is an evolution of the fiscal system.

The program gives hope that the structuring of management will be built according to the segmentation of the economy and businesses to evolve further towards the way of making fiscal policy. This means that the new administration, which will include two of the biggest administrations in the country, as well as parts of local fiscal administrate in 65 municipalities and 308 communes will be required, immediate treatment of impact from structural reformations of these natures, which in the history of public administration in the country has not been implemented earlier.

Experience for these mergers of fiscal agencies into a single are in force in at least 11 European countries ranging from Armenia, Georgia and Latvia end with member countries of the EU, such as Hungary, Greece, Poland, and reaching to countries with historical experience in public finance (Spain, Denmark, Ireland and the United Kingdom). Fresh experience comes from the fiscal restructuring of agencies in Poland, in 2012.

What is needed for advocates and supporters of this scheme (in this group enters the author) is the prediction and prevention of problems that bear such mergers. They begin with the definition of the limits of powers, the overlapping of tasks of maintaining quantitative and qualitative parameters achieved by the current model of management, as well as other commitments will bore administration about gender equality, harmonization of generations and diverse experiences, remakes rules and change propagation model. All elements that presumably will be coordinated by prestigious 'conductors' of public finances management and fiscal modeling structures should not affect the change of 'exchange' flow of fiscal revenues into the budget accounts. However, there's necessary to combine natural and without sacrificing model of voluntary compliance as a product of strategy that implements tax administrations assisted by experts from the IMF since early 2013.

I expect that after the merger of fiscal administrations, the change can leave the first tracks in favor of the consolidation of public finances. By this I mean that the tax and custom officials would therefore enable change for the better.

On these expectations, businesses will begin to walk together with the administrators of public finances the long journey based on trust and mutual respect.

I believe that products branded 'fair taxation' will begin to lead the public services market and will increase their affiliates all over the country.

Good luck!