On November 24 Parliament launched hearings on the government?s proposal to unite the tax department, customs service and the Financial Police into a new structure – the Revenue Service – under the Finance Ministry.
The proposal is part of an initiative started by President Saakashvili, who said in August, 2006 that the authorities should ?decriminalize financial relations? between the state and entrepreneurs. The statement was largely perceived as an attempt to cut the powers of the influential Financial Police, which opposition lawmakers say is a tool ?to terrorize business.?
But at the November 24 hearings the draft law proposed by the Finance Ministry was slammed by opposition lawmakers, who said that the new structure with its law enforcer status will not help to decriminalize relations between the state and business.
Although lawmakers from the ruling National Movement party said that the draft law needs further improvement, they added that the proposal is necessary to streamline the tax collection process.
?It will be much easier for a tax-payer, an honest tax-payer, especially importers, to deal with a united service rather than separately with tax and customs services. On the other hand it will be easer for the state to reveal non-payers of taxes and carry out appropriate measures against them. That is the essence of this proposal,? Deputy Finance Minister Lasha Gotsiridze said while presenting the draft law at the parliamentary hearing.
?I never expected for this law to have an effect on the taxpayer; the major goal of this proposal is to strengthen administrative resources to improve the effectiveness of tax administration,? MP Levan Bezhashvili, the Chairman of the Parliamentary Committee for Legal Affairs, said.
?But at the same time, the distribution of powers and competences of each unit within this new structure need to be more clearly outlined in the draft law? The authors of the draft law share this position and pledged to take it into consideration during the discussions with the second hearing,? MP Bezhashvili added.
?Law enforcement functions that will be granted to this new structure need to be specified in detail, and should become a major deciding factor during the second hearing. Meanwhile, I think it is possible to support this draft law with its first hearing,? MP Niko Lekishvili, the Chairman of Parliamentary Committee on Sector Economy, said.
Opposition lawmakers were demanding that the powers of the Financial Police be cut.
?We support the idea of creating one united structure? But Financial Police powers should be cut. That is what Mart Laar [ex-PM of Estonia who is currently advising the Georgian government on economic reforms] has been recommending, but you are doing contrary to this recommendation and even increasing the powers of the Financial Police,? MP Zurab Tkemaladze, leader of the opposition Industrialist parliamentary faction, said.
Mart Laar was not available for comment at the time of parliamentary hearings, as he was not in Georgia.
?The Financial Police is a tool in the hands of authorities to carry out racketeering? This is a reality and we must not turn a blind eye on this reality? President Saakashvili himself said that the decriminalization of relations between state and business is a priority. But that is not reflected in this draft law,? MP Kakha Kukava of the opposition Conservative Party said.
?The issue currently under discussion is about whether we want to have terrorized business, or motivated businessmen. The first option may have only a short-term effect through the collection of taxes, but will fail to result in sustainable business development in the long-term perspective,? MP Irakli Iashvili of the New Rights opposition party said.
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