Prime Minister Edi Rama has announced that in the coming days his government will propose zero taxation for those earning under 50,000 lek ( EUR 418) a month.
He made the announcement during a speech in parliament on Thursday (16 June)and comes as a response from politicians and citizens who have asked for more fiscal assistance.
The proposal will see the tax-free limit increased from 40,000 ALL to 50,000 ALL meaning more citizens will benefit.
“I have heard you say that we tax work more than capital and that we have the highest taxation in the region. The opposite is true. Labor in Albania is taxed less than in the whole region and goes to a maximum of 5.5%, just as Albania has the lowest taxes in the region. There is no small business in the region with zero tax, with zero VAT,” Rama said.
He continued that “There is zero tax in the region for salaries up to 400 thousand old lekë. And soon, within a few days we will bring the proposal to zero up to 500 thousand ALL, we will go beyond the commitment to halve it.”
The opposition however, was not happy. They noted that today, public debt is almost at 100% and say the government should have revised their budget with a new social protection package.
Additionally, they questioned how INSTAT, the country’s statistics institute found that Albania has both the highest number of employment ever, and the highest number of emigration.
“How much is the workforce today? If Albania is emptied, it is useless to say that employment has increased,” said opposition MP Jorida Tabaku.
During the same parliamentary session, Governor of the Central Bank Gent Sejko called for budget reserves to be used to alleviate social consequences of price increases. He said the rapid rise in energy, food, and basic product costs has also increased the cost of living for households and of production for businesses.
Inflation in Albania is at record highs and Sejko said there is no end in sight, although recession will likely be avoided.
“The Bank of Albania is constantly monitoring the situation. Based on current information and our analysis, the Bank of Albania deems that the Albanian economy has sufficient premises to withstand the shock and to avoid recession.
In these circumstances, the focus of economic policies should be oriented towards maintaining price stability, as a precondition for the country’s financial stability and for sustainable and long-term growth, and in helping the most needy,” he said.
“This focus will require a continuous review of the adequacy of the monetary policy stance, as well as maintaining budget flexibility to address potential contingencies in terms of easing social costs, without compromising the long-term sustainability of public debt,” Sejko added.
Meanwhile, the government is also looking to impose a tax of 15% on self-employed people and sole proprietors as of 1 January 2023.