Baku, Azerbaijan, March 29
By Fikret Dolukhanov - Trend:
Financing sports in Uzbekistan through administrative mechanisms is inefficient and inappropriate, Rufat Guliyev, chairman of the board of European Tobacco Baku, the biggest tobacco producing company in Azerbaijan, told Trend.
He was commenting on the news that starting from June 1, producers of beer, vodka and tobacco products in Uzbekistan will allocate finances to the country’s fund for the development of physical culture and sports created under the Ministry of Physical Culture and Sports.
Guliyev said that there are more effective methods of financing sports, carried out through the means already available.
“There is an excise tax, there is VAT, which can be increased or decreased if necessary,” said Guliyev. “This is while at the expense of funds that the budget receives, it is possible to finance not only sports, but also other important programs, without creating any additional mechanisms.”
Guliyev also reminded that many private Azerbaijani companies themselves show social responsibility and voluntarily invest both in the development of sports and in other socially important areas, so similar mechanism is unlikely to be introduced in Azerbaijan.
The Director of the Center for Economic Development in Uzbekistan Yuliy Yusupov shares the same opinion.
“Unfortunately, Uzbekistan has a very inefficient fiscal system. One of its elements is the creation of special funds to finance various socio-economic tasks (road construction, technical modernization of educational institutions or the development of sports), which are supplemented with specially designed for this taxes and mandatory contributions,” he told Trend.
The downside of this approach, according to Yusupov, is that taxes and contributions for such funds are almost always taken off the sales of goods and services turnover.
"This leads to double taxation as the sales revenues also include costs that were previously taxed,” he said. Also, there is an extremely negative impact on the social division of labor, because the longer is the value chain, the bigger is are the taxes, as a result of the sales volume, which producers have to pay, so long chains simply can not appear."
Further, Yusupov said that it is better to finance this kind of tasks directly from the state budget, rather than link the costs for solving these tasks with certain sources of income.
"For example, we have created a fund for the technical modernization of schools,” he added. “Technologically, we have re-equipped schools for the next 5 years. So, we are not spending that much now, so what to do with the money, which the fund still receives? Give it back? So, the fund starts to think of ways to spend that money."
When the financing is made directly from the budget, the question of how much to spend for various needs is periodically decided by the government and parliament, taking into account current needs, assessing the importance of alternative use of money (for other needs) and general budget possibilities, according to the expert.
"Presently, upon the instruction of the country's president, options are being considered for the reform of the tax-fiscal system of Uzbekistan. Let's hope that the reforms will solve the above-mentioned shortage and other numerous problems of the tax- fiscal system, and the Fund for development of physical culture and sports will be the last "dinosaur " in the list of such funds," Yusupov concluded.
Presently, Uzbekistan considers a draft concept of fundamental tax reform, providing for lowering of tax burden, VAT, unification and cancellation of certain taxes and obligatory payments, as well as measures on improvement of tax administration.