Government set to fight against freelancers
The authorities are looking for ways to increase tax revenues, bearing in mind financial risks in the next few years. However, enacted restrictions on freelancers could result in deteriorating living standards and growing dissatisfaction of a large group of people.
On August 8, Prime Minister Myasnikovich called for improving measures against fictitious employment and to find ways to force freelancers to pay taxes and pension contributions.
Government’s initiative is formally explained by the desire to increase the share of tax revenues in GDP. Today 45% of Belarus’ GDP is made of wages, 42% of profit and depreciation of enterprises and 13% comes from net taxes.
On the other hand, according to the authorities, there are about 400 thousand working age people in Belarus that are not registered as workers or students, which makes about 9% of the total employed in the economy. Accordingly, these people do not pay income taxes and pension fund contributions, however, in the Prime Minister’s view, they are active users of free public services, for example, healthcare and education.
The attempt of Myasnikovich to engage this large group of Belarusians in legalizing their activities is rather unexpected, given that the previous government has long turned a blind eye to informal employment, for example, during the 2011 currency crisis. Their argument at that time was that even if a citizen works informally, he or she still contributes to foreign currency inflow to the country.
Government’s initiative could be based on the same concerns, which were recently voiced by President Lukashenko in connection with the need to pay off foreign debts in 2013-2014. Namely, Lukashenko said that if there was no money to pay off debts, he would be prepared to abandon his promise of the average salary at USD 500.
It is likely that after the suspension of Russian naphtha supplies in Belarus for an indefinite period, the government recalculated financial risks in the coming years and decided to play safe and to engage resources of the potential 400,000 taxpayers.
It is difficult to assess the impact from this initiative, as it depends on how active the government will be trying to engage all those non-officially employed in the legitimate economy. There are no doubts that this decision will increase resentment and will lead to other forms of tax evasion and may also cause a sharp increase in officially registered unemployment. Nevertheless, the initiative per se implies there is a shortage of managerial strategies in the government.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.