Anatol Zmitrovich: Entrepreneurs no longer participate in the economic life

Belarus loses more than a trillion rubles of taxes, but the government needs golden goose, but not his eggs.

Anatol Zmitrovich, Director of the analysis center of the Republican Federation of Entrepreneurship, shared his opinion with charter97.org.

- There will be a regular VAT increase for individual entrepreneurs (IE) since July 1. What could you say about present government's policy against a small and midsize business?

- Every adopted document has not only a certain objective, but should also provide with instruments to achieve it. But, for some reason, the government believes that the VAT increase will stimulate businessmen to take a simplified taxation system with goods from Russia. But here they missed. The matter is that tax rates increase is not stimulation. We have already had such "stimulation", when hired labour was abolished and we were forced into PUEs (private unitary enterprise). This is a coercive "stimulation", so to say. The State did not allow such variants. To pay rent, increased taxes and payments to Social Protection Fund, an IE must earn money. Now he can earn money only on cheap goods, residual stock. The IE won't be able to import a new batch of goods at a higher price with 20% VAT. Therefore, they have to import goods illegally and sell them as residual stock to cover all bills. Having increased the VAT rate to ratio 3, the government does not give a possibility for businessmen to work with documents and import cheap goods.

- What may it lead to in the near future?

-It has already happened. Inspections have been started since June 1. I've already got requests from entrepreneurs who cannot work with the 2.5 VAT coefficient. They start to work with a single tax giving residual stock for new goods. But there are no new goods and the tax authorities understand it and try to monitor and confiscate such goods. A businesswoman from Minsk has recently addressed me. She has been confiscated revenue of Br200 million and goods valued at Br800 millions. Only because of absence of goods transfer consignment! The government already needs golden goose, but not its eggs in the form of taxes. Why should it wait to get Br50 millions of taxes a year, if it is better to take a billion rubles?

- In other words, is the government robbing IEs?

- It is better say in other words: IEs have already been removed from the economic life of the country since March 1 this year, when the state refused Br1.12 trillion of taxes. It is written in a business case for the VAT rate increase. The government believes large shopping centers should replace entrepreneurs. But, unfortunately, this year it has failed, neither IEs nor shopping centers have replenished the budget with this money.

- What will social consequences be because of ruined small business?

- Government officials have not yet understood that due to the reduction of wages at enterprises, low citizen's income - it is happening now - people will not be able to buy many goods in shopping centers. People need markets with cheap goods. But the government destroys them. People do not pay attention to quality, but prices. Therefore, it is time to expect deterioration in economy and increased social tension not only among entrepreneurs, but employees of state enterprises with a sharply reduced purchasing power.