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Should free professions be taxed?!

2024-02-01 10:40:00, Editorial Irena Beqiraj

In a country where the culture of paying taxes is weak, where the belief that their payment can be converted into better public services is low, where the perception that citizens are not treated fairly by the system is widespread, where the administration of tax collection taxes left to be desired, even where the majority had decided to stay in power even by misgoverning, the application of progressive taxation was impossible, as it turned out.

Socialists relied on the interesting fable of progressive taxation "where he who earned more would have to pay more", but applied it exclusively to income from employment, excluding from progressive taxation not only income from capital investments (interest rent dividends) but also income from self-employment. But the socialists were not satisfied with that.

In 10 years, with the unstudied political experiments of successive reductions and exemptions from taxes, which were done not without purpose before the election campaigns, they truncated and worsened the characteristics of the tax system, which today appears ineffective, unfair, and not at all neutral, these qualities which reduce the tax base, encourage evasion and informality, as well as worsen the business climate.

The biggest imbalance the socialists created was the tax treatment of self-employment income.
1. How and why was an unbalanced tax treatment offered to the self-employed?

The self-employed are those persons who are sole owners or co-owners of unincorporated enterprises or otherwise called natural persons. Unlike other countries, including the countries of the Western Balkans, the problem begins with the fact that Albanian law does not treat self-employment income as a source of personal income, but mistakenly treats it as business income. Having said that, the self-employed, instead of being subject to personal income tax, are subject to the general business profit tax regime.

I don't know if you have forgotten, but former minister Cani and I cannot forget the anti-informality campaign of 2015, which was not conceived well, and without yet achieving results, was undermined by the "political care of the belly of Saint Mary of the Prime Minister" which in 2016 exempted small businesses with a turnover of up to 5 million lek from profit tax and reduced the rate of profit tax to 5% for businesses with a turnover of 5 to 8 million lek. The error was further widened, when the non-taxable threshold for these businesses, with another drop of the pencil, increased from 8 million to 14 million in 2018. In search of a third mandate, "socialist love" opened another big loophole in the tax system with the complete exemption from tax of the profits of businesses with a turnover of less than 14 million lek, which also included the self-employed.

There are about 256,000 self-employed individuals in Albania. Based on administrative data, almost 98.7% of the wages reported by the self-employed are at the minimum wage level, and the average wage declared by the self-employed was 39,340 ALL. Having said that, after 2021 the only contribution that the self-employed make to the state budget income is the social security payment.

The effective tax burden gap between employment and self-employment after the 2021 changes averaged 21.4 percentage points. So individuals in order to minimize their tax burden reorganized into small businesses as self-employed providing their professional services mainly as subcontractors instead of registering on the payroll as employees.

Moreover, natural persons, most of whom are registered as self-employed, are also disadvantaged compared to other businesses organized in other legal forms (such as LLC or SHA) as they do not pay dividend tax. The self-employed can make capital investments in the form of facilities or equipment and their income, which is a de facto combination of income from work and capital, is taxed at 0%.

I imagine one of my socialist colleagues reciting to the stands saying: "The great support for self-employment makes Albania an exceptional country in the region, because the percentage of self-employed (out of total employment) is over 50 percent in Albania, the most high in the region, almost twice as much as Serbia, which ranks second according to the ILO estimates" Correct, but the pear has its tail back. The structure of the self-employed shows the quality of self-employment and the reason why it was decided to tax only free professions.

2. The structure of self-employment and the increase in the tax burden only for free professions!

Grafiku tregon se ndryshe nga mesatarja e vendeve të Ballkanit Perëndimor, shumica e të vetpunësuarve në Shqipëri rreth 57 % e tyre janë individë me aftësi edhe arsim të ulët, ndërsa mestarja e Ballkanit Perëndimor per të vetpunësuarit në këtë kategori është 42%. Ndërësa vetëm 9% e të gjithë të vëtpunësuarve janë me arsim të lartë edhe në këtë kategori futen edhe profesionet e lira. Fakti që vetëpunësimi është më i përhapur tek individët me aftësi dhe arsim të ulët, reflektohet edhe nga fakti që niveli më i lartë i varfërisë, pas të papunëve rezulton tek të vetëpunësuarit. Në Shqipëri rreth 45% që individëve që jetojnë në varfëri deklarojnë që janë të vetëpunësuar.

Një ekonomiste tjetër e majtë Joan Robinson e cila ka prezantuar për herë të parë konceptin e papunësisë së fshehur ose ” papunësisë së maskuar”, do t’u thoshte socialistëve optimistë se krijimi i kësaj armate “të jashtëzakonshme” të vetpunësuarish ku njerzit punojnë me marzhe të ulta fitimi ose ndryshe punojnë për sigurimin e një rroge minimale, nuk është gjë tjetër vecse papunësi e fshehur.

Ka dhe një penalizim tjerër që ngre shqetësimin për një sistem tatimor de facto regresiv. Në shumicën e juridiksioneve, që aplikojnë tatimin progresiv jo të gjithë individët përballen me të njëjtën barrë tatimore vetëm në bazë të ardhurave. Në disa vende, ka lehtësime shtesë tatimore për ciftet që rrisin fëmijë. Shumica e vendeve të OECD-së të cilat aplikojnë tatimin progresiv ofrojnë përfitime për familjet me fëmijë përmes dispozitave tatimore preferenciale, duke ulur kështu barrën tatimore për individët me persona në ngarkim edhe fëmijë, qofshin këto të punësuar ose të vetpunësuar. Ndërsa në Shqipëri një individ që ka fëmijë, apo persona të tjerë në ngarkim paguan për të njëjtat të ardhura të njëjtën barrë tatimore sa një individ beqar.

Foto ilustruese

Ndaj nëse shikojnë strukturën e familjeve të cilat jetojnë në varfëri ajo tregon qartazi përse ka rënë lindshmëria edhe pse politika e bonusit të bebeve ishte e pamjaftueshme edhe pa efekt.

Për sa më lart socialistët aktualë nuk mund të ofronin përvecse “një rregullim” të shpejtë e minimal në sistemin e shpropocionaur progresiv tatimor ku dividendin nuk kanë nguruar ta taksojnë edhe me 8% , ku të ardhurat e tjera taksohen me 15% ndërsa të ardhurat nga puna taksohen deri në 23%. Përfshirja e profesioneve të lira ose 9% të vetpunësuarve në skemën e taksimit progresiv përmbush vetëm kalkulimet politike të socialistë ndërkohë që edhe efekti i ketij ndryshimi do të jetë i papërfillshëm në buxhetin e shtetit pasi xhiro e tyre vjetore është vetëm sa 1% e PBB-së.

Socialistët aktualë janë detyruar të ofrojnë arrnimin e radhës në sistemin tatimor progresiv, edhe ne duhet ti kuptojmë dreqi e morri ! Ato nuk mund të taksojnë, të papunët që me anë të zerimit të taksave i shëndruan në të vetpunësuar edhe votues por nuk i nxorrën nga varfëria.

While the left (if there are still any such among the socialists) knows well that the progressive tax system is designed to achieve vertical and horizontal equality by taxing the highest levels of income at higher rates, even aiming for a redistribution better.

A left-wing government would take care to ensure horizontal equality in taxation where first different types of personal income namely, those from labor and capital are treated similarly;

Secondly, this would pave the way for the concept of cumulative personal income; thirdly, this would contribute to the increase of the tax base, it would enable the review of the tax scales and the corresponding rates, introducing lower intermediate rates and rates; and fourthly, progressive taxation offers extraordinary opportunities to achieve better redistribution and to offer efficient social policies, such as the recognition of deductible expenses for all employees or self-employed who raise children, receive loans for the home and first, or to encourage certain behaviors in society, such as property insurance against natural disasters. But drafting tax policies is a craft, while governing according to socialists is simply a mandate!