The American Chamber of Commerce (DhAT), whose membership includes all main businesses in the country, has published its comments on the 2018 fiscal package, Monitor reports.
Besides technical commentaries and thoughts about economic difficulties, such as the lack of any real stimulus for businesses, the experts and members of DhAT have denounced the unacceptable method, according to them in violation of the Constitution, through which the government has decided to manage the fiscal changes related to the budget.
Without entering too much into technical details, the government has proposed in the draft decision on the budget to delegate to a later Decision of the Council of Ministers (VKM) the determination of many changes in the fiscal system, including the “criteria, conditions, and procedures for implementation,” without clearly determining the principles that the government should follow in the preparation of such a VKM.
The draft law for the 2018 budget delegates the VAT threshold to the government, as well as certain tax exemptions and the definition of categories of tax exempt subjects.
According to the DhAT, the Constitution stipulates that taxation levels are determined by law, and therefore not by VKM. In fact, art. 155 of the Constitution states that:
National and local taxes and financial duties, the mitigation or exemption from them of certain categories of payers, as well as the way in which they are gathered, are determined by law.
The government’s proposal to delegate fundamental aspects of the tax system to government decrees opens the way to challenges at the Constitutional Court, which could lead to a chaos in public finances and inconsistent implementation of tax collection.
An economic system needs clear laws, implemented coherently, and stable over time. By contrast, the Rama government has during its first term several times changed the fiscal system, sometimes based on the momentary needs of the treasury, and other times on protests caused by weak or inconsistent implementation. The climate of uncertainty caused by these frequent changes have been particularly damaging to the economy and the investment climate.
An example of the type of discretionary powers the proposed legal changes would give to the government, is the measure that would exempt 4- and 5-star hotels “according to international standards” from taxation for a period of 10 years. It would be up to the government to decide on these “standards,” and therefore allow only a small group of oligarchs to profit.
