Retailers may boost activity in regions due to anticipated major benefits for SMEs

September 10, 2017 23:51
Фота: Вікіпедыя

A draft decree on SME development in the regions proposes to replace the existing taxes with a fixed monthly payment. The decree aims to stop the closure of retail facilities in rural areas and create additional jobs. Should benefits also apply to large business, it would boost their activity in the regions, too, which could kill local SMEs unable to sustain the competition.

The draft decree “On creating environment for the development of trade, catering, and public services” envisages to replace the existing taxation system with a fixed monthly fee (one basic value) from a single retail facility, catering and consumer services facility with the trade area less than 100 square metres. The said benefit would apply to all facilities throughout the country, except Minsk, regional centres and 16 other towns. In addition, the decree proposes to exempt such facilities from the land tax. In order to boost turnover, the decree proposes to enable alcohol sales in small shops (less than 50 square metres) and car shops. Such tax benefits would apply from 2018 to 2027.

The necessity for the decree was due to a decrease in the number of shops in rural areas and their retail space. Since 2013, retail facilities decreased in number by 10% to 9,000. Due to the lack of competition, prices for food and non-food products in rural areas are higher than in the city and goods supply requires additional logistics costs; meanwhile, incomes in rural areas are 80 % of those in urban areas and the proportion of low-income households is double that. Amid staff cuts in agriculture, simplifications in the business environment in rural areas aim to create additional jobs and attract investment to the regions.

Should the decree be adopted as is, it could, along with positive changes for SMEs bring changes for large retail chains, leading to consequences opposite to those initially planned. The draft decree provides an opportunity for large businesses to take advantage of the SME benefits, which could boost their activity in the regions due to a minimal tax burden. Reduced tax burden on business in the regions could create a shortage of budget revenues in local budgets, which are subsidised anyway. Hence, the local authorities would seek for new income sources and could step up informal pressure on SMEs, for instance, increase the number of inspections. In the given circumstances, retail chains could lower their costs and large players could increase their market share by absorbing small regional chains. Meanwhile, SMEs would continue to reduce in number unable to sustain competition with retail chains.

Overall, the draft decree aiming to stimulate small business activity in the regions, if adopted in the current version, would significantly reduce the tax burden on both, large businesses and SMEs. In the end, large retail chains would step up their presence in the regions, prices would go down, however, instead of developing, SMEs would be forced to curtail their activity unable to survive the competition.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.