"Miasnikovich’s Idea Is Unwise And Reeks Of Corruption"

Recently Miasnikovich offered to build “a new economy” and abolish taxes for two years for small and medium enterprises created from point zero.

What a surprise! Mikhail Miasnikovich turns out to be among the leaders of economy reformers. He believes that small and medium enterprises of production sphere set up in 2016 – 2017, should be relieved from all taxes for 2 years, with the exception of mandatory insurance payments.

In fairness it must be said that he said so with a reference to inter-departmental commission, but so many such commissions had been created in our country over the recent years, that I offer to call that “Miasnikovich’s initiative.” It has all chances to become another “standing joke” after the mantra about of foreign investments.

Nevertheless, despite Lukashenka’s regular barkening, rebellious ideas about reforms’ necessity continue to circulate in his entourage. It seems that any minute now they could start talking about privatization, or which is worse, about a necessity to reform the political or court systems.

What is reassuring, is that without an order from the top nothing would be made anyway. Moreover, the idea itself is unwise, and it reeks of corruption. In the present situation one could hardly expect real small or medium enterprises, and “court” businessmen are sure to take this opportunity: what could prevent them from registering a new enterprise easily and pumping the existing assets there? And for two years one would have a breathing space. International practices shows: it is almost impossible to establish the final beneficiary of an enterprise.

It is too wasteful to exempt from taxes all small and medium enterprises. It is next to impossible to separate really new from the new only on paper. But to exempt from taxes sole traders for some period is realistic. And in this case it could be chosen, depending on possibilties – all of them, or just newly registered. That’s the approach supported by the United Civil Party in their programme One Million Of Working Places.

Someone could recall the thesis of the government about a necessity to participate in financing of state expenses (the Law on Social Parasites). However, let us approach the matter from the different side. No reforms of the economy are possible without making redundant excessive workers at enterprises, and real job cuts are impossible without an unemployment benefits which allow making ends meet. According to economists’ calculations, it is about 80% of an average salary for at least one, or even 1.5 years.

And from this point of view a person, who creates one’s business, is much more profitable for the state, than a person who works and pays taxes, or the person who is paid unemployment pay. As his contribution to the common purse is not $200 a year, as it is done under the abovementioned law, but $200 a month. You should agree that there is a point in exempting him from taxes at least for a term which would be established for receiving an unemployment pay.

Let us proceed to foreign investments. If we listen to governmental officials, and Lukashenka himself, we will have an impression that our country is some sort of an earthly paradise for foreign investors. Numerous delegations visit exotic countries, holding expensive presentations in London, in Frankfurt, but the things aren’t moving.

Here is an example of neighboring Lithuania, which successfully solved this issue. Andrius Kubilius was a PM then. During a roundtable discussion on the problems of entrepreneurship, organized by the United Civil Party in Minsk, the assistant of Mr. Kubilius shared his memories:

“The moment it became clear that, despite all adopted laws and resolutions of the government, the issue of investments wasn’t moving, we went abroad together with the Prime Minister. We have traveled over half of the world: from New York to Buenos Aires and from Toronto to Tokyo. Everywhere we went we met with businessmen and told them how good our country was. (Just note – two together, not a crowd of people to fill whole “Boeings” – L.M.) During one of the meetings in California Silicon Valley, a business-woman interrupted us quite abruptly: ”Tell me, Mr. Prime Minister, can you guarantee transparency, steady laws, and protection from the side of the court system, in your country?” He promised her that as a Prime Minister. Since then, meeting with representatives of the business circles, we opened our notebooks and asked what the present needed to come to our country. And Mr. Kubilius guaranteed them all that, being the head of the government. The issue with foreign investments moved from the dead spot.”

Let me remind, this was practically the same start as performed by Singapore’s perennial leader Lee Kuan Yew. Thus, it is not the tax allowances that interest investors firsthand, but transparency, security, predictability. Can all these be guaranteed by our representatives abroad, responsible for export and investments? The answer looks obvious. No wonder the amount of direct accumulated foreign investments per capita in the neighboring Lithuania is 2,8 times higher than here (the data has been provided by UNSTAD). This is to reply to the myths about neglected fields and closed plants, disseminated by the Belarusian Television.

Leu Marholin, Naviny.by