Before Cutting Wool from Sheep Let It Grow First :: Charter'97 :: News

Seemingly, some of the Minsk legislators misinterpret an eternal market law – “marketing is trade’s propellant”. It was determined to test this truth in Minsk conditions. So, under the ruling of the Minsk city council of deputies, from July 1, 2002 they plan to introduce an additional 5% fare for the services of marketing promoters.

It would be naive to believe that the new fiscal initiative, undertaken by the city authorities, will only impact the interests of marketing agencies and media. Now in order to survive under the sun the marketers will have to raise their tariffs. Minsk legal entities will be now faced with a dilemma – either to pay extra money for advertising their production or hope that the buyers will purchase it without any publicity. By the way, the second variant in the conditions of tough market competition inevitably leads to collapse.

According to the president of the Minsk union of entrepreneurs and employees Vladimir Karyagin, the introduction of new fare (or in fact a new tax on publicity) will bring about serious negative consequences – loss of competitiveness of commodity, manufactured at the capital’s markets.

Experts consider the situation paradoxical for the introduction of an additional payment won’t cause a greater influx of means into the city budget. Today the average monthly income from advertising in all Minsk periodicals equals to around 2bln rubles. If one compares this sum to the analogous business in Moscow, Warsaw or Kiev it will seem ridiculous. The publicity market in Minsk is in shambles. As claimed by the pundits, the new taxation will surely lead to a 15% market’s contraction. This means that the companies will spend less on the informational promotion of their goods; the advertisers will get underpaid while the city budget won’t receive enough money in taxes. So there arises a legitimate question: who needs that?

They say that an unofficial reason for the move is the reconstruction of the Independent square, for which they lack money in the municipal budget. So now they determined to urgently find the necessary means. However, there’s a point after which the increase of taxes is no longer able to earn additional money for the budget. Vice versa, the incomes start declining.

At present, the questionable decision is being considered by the Justice Ministry.