Liability for social dependency in Belarus: indicator of problems with budget proceeds
On April 2nd, the president signed decree No 3 “Preventing Social Dependency”. The decree envisages a ‘tax’ for those who do not participate in public spending. Over 1 million Belarusians are not formally engaged in the economy. The authorities are unlikely to raise additional USD 100 million to implement the decree; however, they might spend considerable amounts on identifying those liable to pay the ‘tax’.
As of January 1st, 2015, residents of Belarus, who did not contribute to public spending, or contributed less than 183 days-worth per year would be obliged to pay a 20 basic units fee (USD 245). The fee should be paid no later than November 15th of the year following the reporting period. Penalties for non-payment include a fine from USD 25 to USD 50 or administrative arrest including community service.
The decree is aiming to reach out to 1 million Belarusians who are neither officially employed, nor registered as unemployed. In the authorities’ viewpoint, they do not contribute to public expenditure. According to preliminary estimates, somewhat 400,000 people would be subject to this regulation, while there are not enough jobs in the economy to ensure employment for all of them. In February 2015, Labor and Social Protection bodies reported only 26,500 vacancies.
Belarusian budget is in dire need of additional proceeds. Thanks to this decree, the state budget may raise additional USD 100 million, however that amount may be somewhat inflated. The implementation of the decree will inevitably entail additional administrative expenses, including payroll costs for employees who will be involved in collecting and processing data on social dependents. In addition, the implementation will hardly be efficient – all these employees already have heavy workload. The main success is likely to be achieved through ‘information’ from citizens.
That said, citizens will also make efforts in order to avoid paying the fee. More people will become formally unemployed or working on ad hoc contracts, as well as register as handcrafters.
With this decree, Belarus has de facto introduced a fee for residence in Belarus – regardless of the employment status. Additional budget revenues that the state aspires to raise are inflated as citizens will try to minimize their liabilities to the budget.
President Lukashenka has met with the head of Chechnya Ramzan Kadyrov, who visited Minsk and the Minsk Automobile Plant. Minsk has always sought to have independent links with Russian regional elites, partially, to compensate for the Kremlin's diminishing interest in Belarus. In recent years, Belarus’ contacts with the Russian regions have been extremely intense. However, with some leaders of Russian regions, primarily heads of large republics, communication was more difficult to build. As many analysts in Minsk suggested, Minsk could regard contacts between President Lukashenka and the head of Chechnya as an additional communication channel for relieving tension in relations with the Kremlin. However, most likely, a trusting relationship with Kadyrov is a value for Minsk as such, provided Kadyrov’s broad business and political interests, and a high degree of autonomy for the Chechen leader from the Kremlin.