More Pressure on Business Feared Behind Revenue Service

The state will continue to deal with business through ?police methods? after the merger of the Financial Police, tax and customs departments, as the controversial Financial Police are slated to have a key role in the new structure, economic analyst Revaz Sakevarishvili said in a commentary published by the Georgian daily 24 Saati (24 Hours) on December 6.

The Parliament passed a draft law on the creation of the Revenue Service through a merger of the tax department, customs service and the Financial Police, at its first hearing on November 24. Opponents protest that the Financial Police ? a body set up in 2004 to fight economic crimes ? has too much power.

?It is most likely that the Financial Police will overshadow both the tax and customs services in the new structure. It is more powerful, on the one hand, and on the other hand it has lots of damaging materials about the tax and customs services? It is expected that the state will mount more pressure on business next year in order to prevent gaps in budgetary expenditures, which will exceed GEL 4 billion,? Sakevarishvili writes.

He argues that there are two major reasons why the Financial Police will become an even more powerful unit.

?Starting from 2007 the importance of the customs department in terms of collecting budgetary revenues will become nominal. This is because of the new customs code, according to which reduced customs tariffs have been enforced from September, 2006,? the analyst writes.

As a result, he says, the share of customs revenues in the state budget will be decreased from the current 4,6% to 0,7% in 2007.

At the same time, the tax department fails to collect more taxes as there are not many new tax-payers. 

?So the entire responsibility [to raise money for the budget] will be assumed by the Financial Police again, which has proved many times already that it is able to obtain money from businesses,? Sakevarishvili argues.

The new structure will have the status of a law enforcement agency which will have the right to investigate, to probe and search facilities and to arrest suspects.

The draft law says that the structure can exert these rights ?in the frames of its competences.?

?But it is already clear how the the Financial Police operate ‘in the frames of its competences;’ we can recall the cases of Nikala restaurant and Badagoni wine factory in this regard,? Sakevarishvili says.

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