Why the Authorities Step on Their Tail

Experts believe the number of individual entrepreneurs (IEs) will halve after the adoption of amendments to the Tax Code.

The simultaneous exit of such a number of entrepreneurs will create an enormous social tension in the country, most of all in the Belarusian regions. Representatives of district executive committees are already scratching their heads, says Ezhednevnik.

Such data were voiced at the roundtable held in Minsk. They discussed the consequences of the new tax initiative of the authorities.

As Director of Business Union of Entrepreneurs and Employers of Professor Kuniavski, Zhanna Tarasevich, says if the tax amendments are adopted, about half of individual entrepreneurs will have to become self-employed or stop their activities altogether.

To make it clear, there are more than 270 thousand individual entrepreneurs in the country. It means the adoption of tax amendments will halve its number up to 135 thousand of IEs. Given that it takes an average of 3 months to liquidate an activity, one can imagine the burden that will fall on the state bodies.

The key point, according to Zhanna Tarasevich, is that the elimination of so many individual entrepreneurs (regardless of whether they are self-employed or not) will create a huge social tension in the country.

"Has anyone thought about it?" wonders Zhanna Tarasevich. She gave a specific example: "The deputy chairman of the Rogachev district told me he had 13 IEs who collect milk from 818 natural persons in the district. These IEs work under the simplified tax system. They cannot and will not work differently, because it does not benefit them. If they leave, there will be no one to collect milk".

According to Zhanna Tarasevich, this problem is urgent for almost every district of the country. Moreover, milk is one of the social functions, which today IEs perform. And there are a lot of such functions.

For example, trade is very poorly developed in the Belarusian regions. IEs have a major social function of providing the population with affordable goods, including food. Household services are also mainly the responsibility of IEs.

If tomorrow entrepreneurs will stop collecting milk from the population, providing household services and affordable goods, it will create a huge social tension in the regions, experts say.

If one assumes, however, that all the IEs will not stop their activities. But continue it as self-employed, the increased tax burden will cause a price hike, which again affects mostly poor regions. After all, no one will work at a loss. As always happens in such cases, the additional tax burden on the IE will move to the end consumer. This will cause social tension. However, liquidation will occur when it is not possible to shift the burden.

However, most experts believe the elimination will only happen officially. IEs will continue to work but in a grey area. At the same time, tax inspectors will not be physically able to track such a huge number of grey entrepreneurs.