|
Albania
Government Revenues and Expenditures
Tax collection had been a serious problem in the Albanian-populated
lands at least since the Ottoman Empire extended its rule over
the region and probably since Roman times. The government eliminated
personal income taxes in 1967 and all personal taxes in 1970.
For the next twenty years, central and local governments collected
revenues primarily through turnover taxes and revenue deductions
from state and collective enterprises. In 1984 these collections
accounted for a record 96 percent of government revenue. Chaos
overtook Albania's fiscal and taxation systems in 1990, revenues
dried up, and the government had to issue unbacked currency to
continue operations. In 1991 the government announced that the
country's fiscal system had to be strengthened because "no market
economy exists without taxes." The People's Assembly set to work
on a battery of revenue measures, including a tax on profits,
a sales tax, a business registration tax, a motor vehicle tax,
and excise taxes on cigarettes, alcoholic beverages, and oil products.
Predictably, talk of taxes fueled resentment among neophyte entrepreneurs.
The law on taxation of profits, which the government hoped to
implement in early 1992, appeared to offer significant incentives
to private enterprise and foreign investment. It required payment
of a 30 percent tax on yearly profits but exempted private persons
from payment for three years from the time they began business
activities. Joint ventures and foreign-owned firms were required
to pay a 30 percent profit tax. Upon completing ten years of business
activity in Albania, a joint venture or foreign firm would receive
tax reductions. Foreign enterprises and persons who reinvested
profits in Albania received a 40 percent tax reduction on the
amount reinvested. The proposed measure, however, would require
all joint ventures and foreign-owned enterprises engaged in mining
and energy production to pay a 50 percent profits tax. Foreign
persons were required to pay a 10 percent tax on all repatriated
profits.
With only limited capacity to generate tax revenues, the government
emphasized reducing the overall budget deficit and public debt.
Proceeds from the legitimate sale of international aid items were
used to maintain essential government functions and the social
safety net. Local government reform depended on the development
of a new system of financing based on users' fees, local taxes,
and central-government grants. Albania's local governments were
in dire need of technical assistance to establish a local finance
system and train government staff in planning and financial management.
Data as of April 1992
|
