Fiscal amnesty: What approach does the government aim for?

Fiscal amnesty usually occurs for a reason that only the government that approves it can give the correct answer. Usually it happens for reasons of filling the budget with income in fast time. Since the government is tight on revenues, then the fiscal amnesty can satisfy the immediate need for fiscal revenues, indirectly showing the symptoms of an economic downturn, or an unsatisfactory fiscal performance and in fulfillment of budgetary objectives. 

But in addition to the need for revenue, there may be a need to improve tax compliance as well as an ambition to improve revenue performance over the medium term. 

If we were to be in the beginning of governance, fiscal amnesty is an approach that goes with the goals of a new government, which wants to give the image of a different model and distanced itself from the fiscal policy of previous governments, giving the message to taxpayers that after the amnesty will change the model of fiscal administration.  

In fact, the last fiscal amnesty of 2017 was a continuation of the same approach of previous governments and for all taxpayers did not bring any result to justify the reasons mentioned above. 

Meanwhile, one last reason to approve a fiscal amnesty, which was in fact the main point of the announcement of the fiscal amnesty in 2020 is the repatriation of capital by Albanians outside Albania, with the stated goal to stimulate investment and domestic growth of economy. 

But before we are in forced condition to implement the tax amnesty, which is undoubtedly a good option to increase tax revenue, the government needs to clarify a few preliminary points. 

In the short term, an analysis of the performance of the collection of tax debts and the extent to which the implementation of the law as a whole has been exhausted should be prepared. At the same time, it should be analyzed and presented how the performance of anti-evasion programs implemented in order to combat tax evasion and informality has resulted. But even the efforts so far focused on strengthening the legal framework for the tax administration should be another analysis, which in itself should show us how difficult and costly it is today to remain as a tax evader and in violation of the tax law. From the tax policy, we need to see at the analysis of how much the tax regime has been simplified, as well as how much the tax base of each tax has been expanded. 

If these analyzes were available and their conclusions would have long been the subject of discussion between the government and the public to address problems and stagnation, then today we could be in an economic environment with a lower tax evasion than before and perhaps the amnesty would not be a repetitive version of any government. 

After all, fiscal amnesty should not be the only cure, if we claim that we are in an economy that is towards strengthening its capacities, as well as of an administration that for more than a decade has as its vision the compliance of taxpayers with the voluntary implementation of the law by them.

To implement this vision, tens of thousands of hours of human resources, positive energy and millions of euros of financial resources have been consumed to build risk systems and control models based on risk management and addressing fiscal pressure on evaders and law enforcement voluntarily. 

Approving a fiscal amnesty in this context of policy-making and administration is mostly a temptation to make some “minor modifications” to the compliance model by gaining some short-term budget revenue. The effect that this approach produces, in the conditions in which the fiscal system currently operates, is at the expense of long-term efforts to reform tax policy and modernize the tax administration. 

At the same time, every effort should be made to analyze fiscal policy and administration problems, to understand where it went wrong and what is the reason for proposing a fiscal amnesty. Before discussing fiscal amnesty, it is necessary to review the current strategy and action plan from the policy analysis in order to address these core issues.

With the start of the fiscalization instrument, precisely in function of the formalization of business declarations, but also the discipline of internal processes of money circulation in businesses, it is necessary to first look at what are the alternatives and policies that can lead to sustained improvements in taxpayer compliance and how this digitization of business account documentation will affect tax revenue performance. 

As we analyze the situation that the administration is going through, from the point of view of a fiscal advisor, the fiscal amnesty program should not include measures that would go against the objectives that directly address the problem of non-compliance with the law. For example, granting anonymous status to taxpayers participating in amnesty undermines precisely the voluntary compliance approach, as identifying non-cooperative taxpayers who misbehave with their legal obligations will again be unidentified, upsetting the necessary balance. of tax equality.

The invitation to become part of the amnesty should not go to evasionists and taxpayers with fiscal behavior that is not in accordance with the law. 

Finally, if a government is committed to approving a fiscal amnesty, they must have presented to the Albanian public whether the uncollected revenues from tax evasion and evasion come from inefficient administration, or from the design of an inappropriate tax policy with the economy and the business environment. If these actions are not taken, or are done hastily and without lessons learned to include in amnesty legal drafts, the problem amnesty is expected to combat creates mistrust and may lose public support to serve as an effective starting point for the future