PANDEMIC AND BUREAUCRACY
➢ TAX & BUSINESS ENVIRONMENT (13.07.2020)
👁 Read: 1541




PANDEMIC AND BUREAUCRACY

Since the very beginnings, diseases were a brutal enemy to societies and their consequences changed the course of history. Accordingly, scarcely any of those taken aback by the health and economic crisis, mainly focused on organizing for survival, are aware that COVID-19 takes us to a new, unknown direction. We probably should realize that the length of the crisis and the consequences it would cause are yet unknown, there will not be a return to a previous state and the recovery from the consequences will last for a long period. 

In addition to the aforementioned, we have the constant changes of the opinions and projections of the relevant international institutions (World Health Organization, which has the primary responsibility in the segment of the health crisis), but also the economic institutions, which carry out downward revisions of the economic growth projections. The International Monetary Fund (IMF) predicts a drop of the global economy in 2020 by 4.9% and the EU GDP projections for 2020 amount to -10.2%. This last figure has a special significance for us, considering that the developments in the Macedonian economy are strongly conditioned by the EU demand, evident in the data on our industrial production, which, resulting from the crisis is showing steep double-figure drop rates this year. There are identical developments in the segment of international trade, which shows a drastic reduction.

The former indicates the fact that the Macedonian companies will be facing additional problems, both due to the health situation and the measures imposed to tackle it and due to serious anomalies in the national system, which emerge to the surface augmented in these circumstances. Apart from the severe loses that our companies suffer due to the hindered product sales, loss of markets, problems with transport and timely provision of raw materials and intermediate goods etc., they also suffer losses due to the bureaucratic procedures at home.
Procedures for issuing permits, concessions, licenses, accreditations etc., apart from being a direct cost to the companies, also represent serious obstacle to their unimpeded operation and a source of corruption. In practice, the deadlines within which the official persons are supposed to proceed to resolve a certain case are not adhered to, and if the case is not resolved within the statutory deadline or if they do not act upon a certain request – no one is accountable.

From fiscal point of view, the non-fiscal income and the income from other taxes (which includes income from municipal taxes and fees for issuing licenses and permits for performing an activity, concessions, administrative taxes, penalties etc.) in Budget for 2019, have shown a realization rate of MKD 19.447 million or 9.5% of the total income generated by the Budget for 2019.

Therefore, the direct business expenses on the said grounds amount to roughly EUR 315 million on annual level, but the indirect expenses that result from waiting and the lack of possibility for quick achievement of certain goals, interwoven with corruptive behavior, are much higher and have a restrictive impact.

Accordingly, in these conditions of health and economic crisis nowadays, before any ad hoc measures adopted in the name of dealing with it, we necessitate systemic reduction of the bureaucratic procedures, simplification and rationalization of the non-fiscal and parafiscal charges and introduction of a mechanism of responsibility to the administrative public servants related to inaction within the statutory deadlines. 

We urgently require establishment of a special Register of non-fiscal and parafiscal charges that will contain identification elements and clear designation of the type of charges, as well as functional electronic system that will keep track of the submitted applications for permits, concessions, licenses at any stage of the process, aiming for timely reaction, but also for assigning responsibility to the administration for the delay of certain procedures.

People responsible must understand that the administration is a servant, not a master of the private sector and by following this premise they should reduce bureaucracy, which would represent a permanent contribution to the conditions for doing business in a time of pandemic, but also thereafter.

Aneta Dimovska M.Econ
Manager at the organizational unit for member representation and networking