Barys Zhaliba: Tax Collection Turns Into Belarusian Paradox

The individual entrepreneurs’ incomes decline while the tax authorities keep pulling more and more money out of them.

Doctor of Economics Barys Zhaliba has told this to charter97.org.

- The Ministry of Taxation has informed that individual entrepreneurs have paid 3,9% more taxes to the budget compared to the same period last year. How can it be so if many entrepreneurs didn’t work in the beginning of the year, and some protested against the Decree #222?

– Let’s start with the fact that the GDP is falling in our country. It fell last year as well, while the taxes keep gathering. Let us just recall what innovations have been introduced this year, what taxes and fees they have invented. Just recall the taxes for parcels which the people ordered through the internet, the fees for importing goods from abroad. Thus, starting with that, they have introduced enough taxes since this year. This explains the surplus to the budget.

Another factor of filling the budget at the individual entrepreneurs’ expense is fine-grained examination. The tax authorities use very severe methods at their inspections. They make fines out of anything. I think they really over-fulfill all plans and get bonuses for that. The entrepreneurs here say that tax inspectors “work hard”. These factors’ combination gives us the following picture: the GDP is falling, the number of taxes is growing.

I have read recently how tax inspectors pay their visits to individual entrepreneurs. They fail to find anything, but say, like, we don’t care, we need to pull a fine out of you, to cavil about something. This also helps to increase that percentage.

– Still, the number of entrepreneurs has significantly lessened, but more finances keep coming to the budget.

– This is also a Belarusian paradox. The number of entrepreneurs lessens, their financial state deteriorates, thus the tax for income continues to reduce, but the total sum of revenue receipts is growing. This is, as I said, a Belarusian paradox.

The tax authorities have become very harsh. They have started pulling more money out of the remaining entrepreneurs during their inspections. This is their aim: to drag as many taxes as possible out of the business.