The recent public remarks about the events that happened in the last few weeks in the northern town of Kukes imply that the government will enforce some form of limitations when it comes to imposing new taxes and levies.
Lucky enough, the Government has learned the lesson that achieving efficiency through centralized command of authority, without prior public consultation, is against the constitutional principle that the Government can be held accountable by the people and can be recalled by the people.
Because of the lack of transparency on public spending and budgeting, the Albanian taxpayers and voters lack accountability and transparency by their elected government, when it comes to political and bureaucratic behavior. Instead they observe government decisions on taxing and public spending. Hence there is not a free-rider problem, as the Government sustains, but a “lack of transparency” which should be redeemed and definitively resolved within the constitutional framework of democratic taxation.
Moreover, the asymmetries of information are also caused by the inability to measure the output of the economic policies. Fair and free market do not, in general, measure the value of the government’s output, when it comes to efficiency and productivity of public spending and investment. Instead, the government has taken the most important economic decisions during the post-communist transition, in the absence of a market, or with a market working in a distorted way.
De facto, the state remains the main actor, the only “mighty” hand in the economy, instead of the multiple “invisible hands” of the market. We have left behind the communist paternalistic state, but we don’t have yet the productive state. Instead our collective psychology is still attached to the hybrid idea of the “protective state”, which nevertheless has not ensured the adequate legal and institutional infrastructure for the economy.
At the level of the rule of law, it is plagued by the lack of transparency, since it has not made public how 1.7 billion euros collected so far through taxation were converted to our common public good- the construction and maintenance of the National Highway.
In the absence of the market constraints, it is clearly necessary to develop some legal and political substitutes instead, relying on the constitutional principles. The central tenet of democratic ideology and its constitutional foundations is that taxation is something that we choose to do to ourselves, and not something that is imposed on us by some rules.
According to Article 15 of the Albanian Constitution, the Government is not the source of our rights of person and property. To the contrary, government is something we establish with our prior rights of person and property to preserve and protect those rights. An effective fiscal system to support government provision of public goods and services, includes fair and reasonably predictable tax laws, which are essential to supplement other legal infrastructure and to clarify the role of the government in public expenditure.
Moreover, a sustainable fiscal management system in the implementation phase is an absolute necessity both for the adequate functioning and democratic government, but for the encouragement of foreign direct investment and economic growth as well. None of the Ministers and policy experts who designed and put in place the fiscal management of the 1.7 billion euros - public money- were summoned before a public hearing in the parliament. This practice yields democratic deficiency of our accountability and transparency standards in the management of public finances.
More importantly, this is a stimulus to reflect on the state of the rule of law in public finances, which is merely the way the governance of public finances and our national legal system operates.
Without resolving this fundamental disjunction between the real state of affairs in public finances and the rule of law, by making the government legally liable for its shortcoming in complying with, legal standards of economic governance, one cannot expect the establishment and the consolidation of a functional national financial system.