Honorary President of IPPM, Prof. Dr. Arben Malaj, Why can’t penalties fight informality?


“Taxes are the ones we pay for civilized society” 

Oliver Wendell Holmes Jr.,

1841 U.S. Supreme Leader Centers.


“Taxes you may have to pay for civilized society”, this vision please enter into the construction of the US Internal Revenue Service (IRS). Rama service and after the previous failure, for the second time more in the areas of the fight against informality, penalties stating that “Two options to secure at work, taxes, and death”. There are also macabre statements about taxes like that of Mark Twain, that there is a big difference between a tax collector and a tax collector; Tax collecting tips are summarized in how to get as many feathers/mentions from peeing a goose without tweaking its nature. That is why you will find more or fewer feathers / less to find. Every new strategy against informality Looks for studies of the Albanian reality for the factors of the citizens but also the politicians that feed the informality. Political instability, indicative polarization, and the authority model of authorities Self-determination identified as the three main factors that enhance informality. Albania, not only now has three factors, but thanks to the indices and reports you want to deteriorate. Failure to provide direct service against the informality of the successful and failed case gives the government’s media focus, the status of an action rather than a successful reform.


The spontaneous launch of a media campaign, over-mediation and focusing solely on penalties are three clear proofs of a lack of vision and a lack of a successful national strategy against informality. The focus solely or mainly on penalties is not recommended in any successful international study and experience. Second – the failure of penalties was proven in the first media action against informality in 2016. This failure was announced by some experts of the Institute for Public Policy and Good Governance. The IPPM not only warned of failure but opposed the Constitutional Court’s stratospheric fines, which the government gave to unconstitutional authorities because through high and corrupt fines the government determines which business can be developed and who, through penalties, must be extracted from lucrative markets. The Constitutional Court overturned abusive penalties. Even replacing business cassettes whenever new software comes out or speeds up from G3 to G5, is wrong and costly for businesses. N.q.s. the government thinks the new software will increase budget revenues by 10 to 17%, expected to be in the range of ALL 30 to 53 billion. In keeping with Smith’s four principles of tax administration, tax collection improvements should be at zero additional cost to the business. This should be the basic principle of any tax collection improvement strategy. But with the “culture” of change several times within the same fiscal year of taxation and administration, governments are directly and indirectly raising additional costs for business.


There are three prerequisites for the success of anti-informality strategies:

First, improving governance because it leads to direct and tangible benefits to taxpayers, it increases the willingness to pay taxes. While the low political stability, the low quality of regulatory institutions and the widespread level of corruption fuel their informality.

Second, institutional credibility. When they feel real benefits in everyday life and when public institutions have high public credibility, taxes represent our payments to live in civilized societies.

Third, tax morale. Tax morality analyzes why people pay taxes, not why they avoid them.

Tax payment should be analyzed with modern theories of individual behavior since it is assumed that when tax payments are facilitated, taxpayers will act in good faith. In the Albanian reality, it seems that the second campaign against informality resembles a spontaneous action and is mainly based on penalties. Successful reforms in the fight against informality should be based on mitigation measures, no additional costs for businesses. “Paying taxes for our civilization” requires that public functions and services be best provided everywhere and for everyone in our country. If. taxpayers see that kindergartens, kindergartens, hospitals, schools, the environment, infrastructure, and social cohesion are significantly improved; if public safety and road safety are increased and guaranteed; if taxes are used with maximum efficiency, if corruption is reduced, if state capture is punished and minimized, if. public accountability is real; if transparency is maximized, citizens are made aware of the efficiency of their use of money and, as a result, tax payments themselves increase, informality decreases, the government has the necessary financial resources. But if citizens and taxpayers have real day-to-day concerns about the country’s poor governance, tax self-pay will not increase steadily until the country’s good governance is felt. Amid real worries about seizing the state for widespread corruption, when the quality of public services and services has deteriorated or the improvement is apathetic if every Tirana mayor demolishes and rebuilds Skanderbeg Square, where billions of lek of taxpayers are abused. In Tirana, any objective of reducing informality will result in some symbolic and unstable achievements as happened the first time.


In a situation where public perception, not only in Albania, is that governments work for the rich and the wealthy, the government must launch action against informality with the fight against the black economy, the criminal economy that kills the future of every Albanian. If the fight against the capture of the state will have concrete achievements, if political instability is reduced, if the credibility of any constitutional institution is increased, if the daily life of the Albanians is actually better, then the informality will decrease, itself – tax payments will improve steadily.

(The views in this posting – do not express the Bank of Albania views). 

Source: Telegrafi.al


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