Baku, Azerbaijan, Nov. 22
By Elena Kosolapova - Trend:
Increasing taxes on alcohol, tobacco, luxury housing and cars in Kazakhstan will not bring significant positive results, Director of Risk Assessment Group in Kazakhstan Dosym Satpayev said.
"I believe that all similar attempts Is the imitation of rough activity and they [additional taxes] will not have a serious impact on budget replenishment but cause a very broad discussion at present," Satpayev told Trend on Nov.22.
The Kazakh Senate (the parliament's lower chamber) passed a law increasing taxes on luxury goods, transport and property and excise taxes on tobacco and alcohol on November 21.
The expert recalled that this law was adopted in order to increase revenues of the state budget.
"Here there is a need to take into account one important moment that the revenues that Kazakhstan gets through selling its raw material, first of all oil and gas do not go to budget but to the national fund where they are accumulated to fulfill one or other goals. And the budget itself in recent several years is formed through tax base. Given that this base is not increasing, but on contrary decreasing in Kazakhstan, the volume of collected taxes also increases. Therefore, the government by all means attempts to replenish the budget with taxes including by imposing new taxes," he said.
However, according to Satpayev, it will be pretty hard to resolve the current problems with the help of this law given that only according to the official data, around 20-25 percent of the country's economy is "in the shadow". And according to unofficial data, this figure hits almost 40 percent.
"The major part of state business (small, medium and even big business) also attempts to evade taxes and has a "shadow" cash. Of course under these conditions it is hard for the state to rely on that the budget will be replenished only because the great volume of monetary mass doesn't leave in the form of taxes, but circulates in a shadow area," the expert said.
Thus, according to the expert, in order to increase the incomes to budget, first of all it is necessary to create a transparent economy, transparent conditions for business so that it would get out the the "shadow" and would be able and want to pay taxes.
Satpayev also recalled that some 2.7 million of around 17 million people of Kazakhstan work for themselves without paying taxes and without making pension contributions.
"These people are just "out" of the state control system," Satpayev said. "The country has not determined them yet, including the tax payments."
"Moreover, the law has are many omissions," Satpayev said.
"The property very often is not registered for the owners in the face of the high-ranking officials," Satpayev said. "There were cases when expensive property was registered for the disabled, pensioners, war veterans and so on. There is a lot of disputes."
Therefore, first of all, it is necessary to achieve transparency in the state structure itself. In particular, it is necessary to make the declaration of income mandatory and at the same time make a declaration of expenditure among the officials who are the main owners of expensive housing and automobiles in the country and abroad.
As regards the increase of excise duties, then, according to the expert, this measure is likely to lead to the fact that part of the business will retreat into the shadow and will produce and sell the products illegally, that is the law will cause an effect opposite to the expected.
According to the law, the excise rates on alcohol products are proposed to be increased in Kazakhstan in 2014 from 500 tenge ($ 3.3) to 1,000 tenge ($6.6), up to 1,200 tenge ($7.8) in 2015 and up to 1,600 tenge ($10.5) in 2016.
It is planned to increase the excise rates on cigarettes from 3,000 (about $ 20) to 3,900 tenge ($25.5) in 2015 and from 3,900 to 5,000 tenge ($32.7) or by 30 percent annually in 2016 to further increase the excise rates.
As for elite housing, the tax will be imposed on property worth over $1 million.
The tax rate on cars with an engine capacity from 4,000 to 5,000 cubic centimeters is proposed to be increased from 117 MSR to 130 MSR (monthly specified rate, 1 MSR is 1731 tenge - about $ 11 from January 1, 2013), for vehicles with engine capacity of more than 5,000 - up to 200 MSR. New tax rates are proposed to be used for vehicles that will be purchased from January 1, 2014.
The law was submitted for the Kazakh president's signature.
