Doubts Over Capital Amnesty
Doubts Over Capital Amnesty
The Kyrgyz government is to offer an amnesty for illegal capital, but NBCentralAsia economic observers say there is little incentive for anyone – including corrupt officials – to come clean about their incomes.
On June 18, parliament passed a law on a “capital amnesty”, under which anyone can register real estate and other assets by paying a levy of five per cent of its assessed value.
The campaign will last 90 days from the moment President Kurmanbek Bakiev signs the law.
According to some estimates, the shadow economy accounts for up to 60 per cent of the Kyrgyz economy as a whole. Bakiev promised to bring such activities into the legal economy when ran for election in 2005. An amnesty bill was first presented to parliament in October 2006 by the then first deputy prime minister Daniyar Usenov.
In early June 2007, Finance Minister Akylbek Japarov said the new campaign should result in budget revenues of 250 to 300 million US dollars in capital registration fees.
Some NBCentralAsia observers say the government could go even further and announce an amnesty for underground businesses. Economist Alymbek Biyalinov believes it is vital for the thousands of underground workshops and factories operating in the grey economy to go legitimate.
A wide-scare public awareness programme should accompany the campaign, and those now operating in the shadows need to be convinced that it is in their best interests to register their assets, he said.
Biyalinov believes the campaign will boost budget revenues, broaden the tax base and give the state a clearer picture of the real economic situation.
However, Amangeldy Muraliev, a former prime minister who now heads “Public Government”, a pressure group, believes it is too early to be offering an amnesty of this kind.
“Both the tax code and investment laws are far from perfect,” he said. “Small and medium-sized businesses are not supported by government. Entrepreneurs don’t trust the legislation, so legalising capital won’t produce any results.”
Sapar Orozbakov, director of the Bishkek Centre for Economic Analysis, is also pessimistic, predicting that hardly anyone will use this chance to legalise their capital, and officials have no incentive to push for it.
“Government officials have an interest in capital remaining outside the legal economy. Businessmen do pay ‘taxes’ – but straight into the pockets of officials, so the latter will oppose any legalisation of business activities so as to keep this source of income,” said Orozbakov.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
On June 18, parliament passed a law on a “capital amnesty”, under which anyone can register real estate and other assets by paying a levy of five per cent of its assessed value.
The campaign will last 90 days from the moment President Kurmanbek Bakiev signs the law.
According to some estimates, the shadow economy accounts for up to 60 per cent of the Kyrgyz economy as a whole. Bakiev promised to bring such activities into the legal economy when ran for election in 2005. An amnesty bill was first presented to parliament in October 2006 by the then first deputy prime minister Daniyar Usenov.
In early June 2007, Finance Minister Akylbek Japarov said the new campaign should result in budget revenues of 250 to 300 million US dollars in capital registration fees.
Some NBCentralAsia observers say the government could go even further and announce an amnesty for underground businesses. Economist Alymbek Biyalinov believes it is vital for the thousands of underground workshops and factories operating in the grey economy to go legitimate.
A wide-scare public awareness programme should accompany the campaign, and those now operating in the shadows need to be convinced that it is in their best interests to register their assets, he said.
Biyalinov believes the campaign will boost budget revenues, broaden the tax base and give the state a clearer picture of the real economic situation.
However, Amangeldy Muraliev, a former prime minister who now heads “Public Government”, a pressure group, believes it is too early to be offering an amnesty of this kind.
“Both the tax code and investment laws are far from perfect,” he said. “Small and medium-sized businesses are not supported by government. Entrepreneurs don’t trust the legislation, so legalising capital won’t produce any results.”
Sapar Orozbakov, director of the Bishkek Centre for Economic Analysis, is also pessimistic, predicting that hardly anyone will use this chance to legalise their capital, and officials have no incentive to push for it.
“Government officials have an interest in capital remaining outside the legal economy. Businessmen do pay ‘taxes’ – but straight into the pockets of officials, so the latter will oppose any legalisation of business activities so as to keep this source of income,” said Orozbakov.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
