Belarusian authorities test people’s reaction to bizarre tax initiatives
The government proposes to introduce a fee for using private vehicles, as well as a tax on so-called ‘spongers’ (i.e. people who do not work for a living and do not contribute to society).
The authorities’ bizarre tax initiatives are meant to measure society’s response and to find the best way to pick citizens’ pockets to replenish the budget. The authorities are seeking ways to seize people’s income so that it has the least impact on the president’s approval rating and will not result in open protests. The state plans to preserve the current economic policy in the short and medium term by reducing the welfare state.
In January – September 2013the national budget surplus was BYR 1299.2 billion. According to preliminary estimates, by the year-end, the budget deficit will be BYR 411.5 billion (about USD 44 million). The deficit will be caused by the shortage of income tax and foreign trade revenues. In January – September 2013 only 41.7% of the projected income tax were listed to the budget, and only 60.3% of foreign trade revenues. In 2013 Belarusian imports reduced and export duties on potash zeroed out, creating budget deficit by the year-end.
Budget deficit could be recovered by two means: either by cutting costs or by finding additional sources of revenues. While the government could reduce expenditure on security agencies, banks, re-compensations, and other budget items, it focuses on citizen’s pockets and additional taxes for population as the new sources of budget revenues.
The authorities said they would increase the share of cost recovery for housing and communal services in 2014, would raise the excise duties on motor fuels by circa 14.5% and came up with some other exotic initiatives to pick citizens’ pockets.
Belarusians respond sluggishly to violations of their civil and political rights and freedoms, but are quite ready to defend their economic interests. Some previously announced bizarre initiatives, such as the introduction of new fees and taxes, were disavowed following reactions in the society. Over 25,000 people signed a petition against introduction of the USD 100 ‘exit’ fee.
It is worth noting that such bizarre initiatives have not been voiced by Lukashenko, but by other public officials. Lukashenko wants to avoid a negative impact on his approval rating before the elections. The latest initiative, regarding a tax on cars, was announced by a minor Finance Ministry official.
Simultaneously, some new tax initiatives have developed. For example, Prime Minister Myasnikovich’s proposal to tax the unemployed (up to USD 280 per annum) and the tax on using private cars have become draft laws. Neither the government nor the ministry officials are sensitive to society’s reaction, their future careers depend entirely on the president’s goodwill.
In addition, president Lukashenko demanded to complete the transition to a contract employment system. This mechanism proved effective in reducing workers’ protest moods before the 2006 presidential elections. According to Statistics Ministry, by late 2005, 92 % of workers in Belarus had been enrolled in fixed-term contracts system.
The authorities continue searching for the least painful ways to replenish the state budget at the expense of the population without changing the current policy.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.