(Podgorica, 12 June 2013) – MANS today urged Montenegrin MPs to reject the adoption of the “Value Added Tax Law” and thereby demonstrate that they care about the interests of the country’s citizens and not only those of Russian tycoons (like the owner of the KAP).
MANS has been arguing in recent weeks that hiking the VAT form 17 to 19% is aimed at filling budgetary gaps and not a genuine search for fiscal stability. Instead the increase seeks to further subsidize the KAP at the expense of all citizens, including the settling of the Russian tycoons debts (which were guaranteed by the Government of Montenegro).
This model was confirmed yesterday by the junior Social Democratic Party (SDP) in the ruling coalition, which noted that the VAT hike was essentially a “KAP tax.” This means that the revenues generated by this increase will be used to offset mutual debts between energy companies, the Government, and the KAP.
We believe that such government behaviour is absolutely unacceptable and that the Assembly mud prevent further regressive taxation on citizens (following the ‘euro for euro’ tax of last year and the so called ‘crisis tax’ on employee earnings). The introduction of a VAT increase will cause a wave of price increases and a resultant decline in the purchasing power of the most vulnerable citizens (pushing many more into poverty).
On the other hand, the accumulated sum of tax arrears owed to the government far exceeds the projected benefits of a VAT hike. However, the government has shown no inclination to collect arrears on corporate taxes, customs duties and other existing fiscal measures that would add tens of millions of euros to the state budget.
This shouldn’t be a surprise if one examines the ownership structures of the country’s largest corporate tax debtors. Ownership is concentrated in the hands of so-called ‘strategic partners’ who are supposed to fill (and not empty) the state budget, as well as ‘deserving friends and godfather-like figures’ close to senior government officials, including the Prime Minister.
MANS has in recent days demonstrated that if existing corporate tax and customs duty arrears were collected from a few of the country’s largest enterprises, there would be no need to raise the VAT.
Similarly, MANS has demonstrated that the Government’s tax policy in the last few years has aimed to attract foreign investment by substantially (or completely) freeing investors of tax liabilities. Similarly, it has adjusted the legal framework to ensure that it can be easily manipulated to exempt certain individuals and companies from paying taxes. The examples of the EPCG, KAP, Montenegro’s Lottery, Crnagoraput, the Pljevlja Coal Mine, etc. are all examples of such a policy.
The Parliament of Montenegro must absolutely put an end to the humiliation imposed by the government on the citizens, and the intention of Prime Minister Djukanovic (and his friends) to displace the burden of corruption and poor policy making on citizens.
Consequently, MANS once again calls on Montenegrin MPs to protect the public interest by voting against the “KAP tax” and to strike down the VAT hike.
