April 5, 2016 Print

Governments have an endless appetite for spending taxpayer money, so preventing new tax hikes from passing is a difficult task — let alone eliminating existing taxes. Albania-based Atlas Network partner Foundation for Economic Freedom (FEF) has done exactly that, by putting together a successful campaign against a plan by the Albanian government to raise taxes. FEF’s efforts have been so successful that the government not only retreated, but also announced it would abolish annual taxes for small and medium businesses in Albania.

“In our view there was a pronounced lack of coherence in economic policies undertaken by the government,” said FEF Executive Director Besart Kadia. “On the one hand, it sought immediate formalization of the economy without a clear strategy and over 120,000 on-site visits to businesses by tax authorities. While we welcomed measures to fight the informal economy, we asked the government to come up with a strategy to encourage entrepreneurship in the country.”

FEF held three conferences, and national television, print, and online media regularly covered their events. Kadia participated in a live debate for more than an hour with Finance Minister Arben Ahmetaj on one of the most popular national television shows in Albania. Throughout the year, FEF published books and weekly articles about classical liberalism, and initiated public forums with think tanks, business organizations, academics, students, and journalists. These efforts included collaboration with the American Chamber of Commerce, the Tirana Chamber of Commerce, the Industrialist Confederation of Albania, and the British Chamber of Commerce. They all stood in unison against higher taxes.

“FEF also conducted a poll with small and medium enterprises (SMEs) to highlight their concerns,” Kadia said. “We directly interviewed  125 businesses, and the poll results showed that the businesses opposed some of the government’s measures to fight economic informality and that higher government intervention had put pressure on their businesses.”

Before FEF’s successful tax reform campaign, Albania’s business climate had deteriorated to the extent that it fell on the World Bank’s “Doing Business” rankings by 35 countries, including a drop of 67 places for something as simple as obtaining construction permits and a drop of 12 places for high taxes. If the Albanian government follows through on its plan to slash taxes for SMEs, it will be telling evidence to see Albania’s economic growth in subsequent years as it begins to climb back up future “Doing Business” rankings.