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Shkruar nga Pamfleti
The high financial bill of the programmed salary increase has put the government in front of the need to secure additional income. According to the plan announced by the prime minister, the increase of the average salary to 900 euros for public servants has a bill of about 40 billion lek or almost 360 million euros per year. Now the government is thinking about where to find this money.
The main problem with increasing salary expenses is that they are stable, that is, not one-off expenses that occur only once, but annual payments. As such, they require balancing on the revenue side with measures that guarantee stable inflows.
For this reason, an idea suggested 4 years ago by the International Monetary Fund in the Medium-Term Income Strategy has begun to be discussed in the corridors of the government. This is the return of Value Added Tax in education and health.
Currently, Albania has a regime that excludes health and education from VAT. Education was excluded by Sali Berisha's government after the demands of private universities, while health was excluded by the socialists when they came to power. The current law on Value Added Tax stipulates that the supply of services for the education of children or young people, by public or private educational bodies, are exempt from this tax. The same situation is defined in Article 51 of the VAT Law for health services.
According to a calculation by the Ministry of Finance, only from the exclusion of these two sectors from VAT, the state budget loses income to the extent of 1.4 percent of the Gross National Product. Expressed in value, this means that the restoration of the tax in education and health would bring about 250 million euros of additional income per year.
But although it would provide the financing of most of the bill for the salary increase, the imposition of VAT on education and health would automatically increase by 20 percent the prices that citizens pay for these services. In a country where public service does not guarantee universal coverage, these measures cause painful social consequences.
However, this is still only a discussion, as there is still no final decision to restore the VAT of these two sectors, which is certainly a political decision. But it is certain that on January 1 next year, the government will have to stick the tax hammer somewhere. And today, the idea that has the best chance of materializing is precisely that of taxing health and education. While other additional measures are related to the increase in property taxes./ Oligarkia.al
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