September 18 – September 24, 2017

Control over economy could be relaxed but arbitrary rule would retain in Belarus

The situation has not changed
Control over economy could be relaxed but arbitrary rule would retain in Belarus

By weakening control over the economic activity, expanding self-employment opportunities and attempting to focus on prevention rather than punishment for economic violations, the state is likely to create opportunities for arbitrary behaviour of officials vis-à-vis economic entities.

To boost employment, the Belarusian authorities have expanded the list of activities which could be carried out without the formal registration and subjected only to a single tax paid once a year. Amid the state’s reduced capacity to provide employment, weaker control over economic activity is a rational choice. The presidential decree simplifying business rules in rural areas and small settlements has a similar goal. However, the single tax size varies greatly depending on the activity type, there are no unambiguous criteria regarding applicability of the new rules, or the clarity about the liability of the state bodies for arbitrary decisions, which could nip in the bud the growth in the economic activity in rural areas.

The state is even more inconsistent in reducing the pressure on business. For instance, the newly established institute of tax consultancy has raised concerns in the business community that it would become an obligatory service, same as e-declarations and subscription to the Tax Ministry publications, and is unlikely to protect business from arbitrariness of the tax authorities. The president’s instructions given to State Control Committee Head Anfimov during the recent discussion on restricting powers of controllers, have been contradictory, too. The president has requested to focus on prevention of economic violations, rather than the punishment, to introduce responsibility for arbitrary inspections and violations during their conduct, and in the meanwhile expressed fears of losing control over the economy and encouraged to boost already high influence of the power block on business.

Yet, so far, the state has been unsuccessful in relaxing the administrative pressure on the economy. Moreover, state bodies are not in a position to curb each other on this issue. A reduction in administrative procedures often leads to the invention of new ones.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.

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