Prime Minister Edi Rama, and the State Minister for Reconstruction Arben Ahmetaj at weekly press conference focusing on economy and the ongoing post-earthquake reconstruction programme:
Prime Minister Edi Rama: In this open weekly forum on economy today we will focus on the reconstruction process as a process which should provide, as it is the case, new and quality housing for the families affected by the natural disaster, the November earthquake; mass employment, as it is creating jobs for over 27.000 individuals, who have been involved in this program and, thanks to the reconstruction sites already opened in the whole territory of the affected area, they send a monthly salary to their families; significant impact on an economy affected by this damn pandemic.
Just like not every bad thing do not always happen for worse the November 26 tragedy has actually opened up a window for fresh opportunities and the Reconstruction Programme has impacted and is significantly impacting our economy. These are the three main aspects of this process.
–Mr. Prime Minister, why an intellectual who earns 1.6 million lek in monthly salary and pays a 23% income tax rate should vote for you and why he shouldn’t vote for Lulzim Basha, who has pledged to impose a 9% income tax rate only? I am referring to employees, not business owners or executives. Why should they vote for the Socialist Party and not the Democratic Party?
PM Edi Rama: Thank you very much for your question, even though, to put it bluntly, it is really a waste of time to discuss the DO proposals, because, in a nutshell, the DP program is just like the character of the DP leader himself, a weak and a man without backbone. However, it is worth – I mean in principle – to answer your question, because it is a principled discussion that clearly distinguishes among our paths and alternatives.
The flat tax benefits the rich only. The flat tax system is to allow those who earn to earn a lot more and beat the living daylights out of those who earn less. This is for sure. We are today in the conditions when our taxation, which I call fair taxation and which is seen as progressive tax as a concept, is clearly a taxation system that has yielded results and has paid off, both in terms of social moral and in terms of income for individuals and the state budget.
The 23% tax rate you cited and which I have happened to come across so often most recently, is actually a misinterpretation. This is because the 23% tax rate is not applied to the wages of 1.6 million lek a month. This is a fact.
We are certainly aware of the need to review progressiveness when it comes to the personal income tax rate in order to be more open to the needs of those who are not at the very top of personal income, but in the category of those who you just referred to. This will be done based primarily on the conviction that it is time to do it and we are convinced about that. Second, it will be done without any connection to the electoral campaign.
We don’t want the electoral campaign and the polls become a reason to weaken our character, weaken precisely what forms the basis of our governance; governance based on the principle “those who earn more should pay more, and those who earn less should definitely pay less.”
All those who describe it this way – and I happen to hear it so often – they interpret it in a wrong way because progressiveness over personal income is applied to another group. I am giving the floor to the Minister to make a very detailed presentation in terms of accurate figures, precisely related to the progressiveness over the salary.
Reconstruction Minister Arben Ahmetaj: Thank you, Mr. Prime Minister! We have prepared a detailed analysis on all the items of the so-called program, but I would certainly refer to through correct words, also because of the seriousness of the issue.
First of all, progressiveness as referred to by the Prime Minister, or the progressive tax system favours the middle class and the entire lower income class. The easily verifiable fact shows that through what we call as the flat tax within progressiveness, today as we speak, about 960 million dollars have been transferred to the hands, the pockets of the middle class families that account for 94.5% of employees.
The flat tax favours a minority that we have never opposed, but of course and a very good part of them I must say they voted for us, but in the correctness of our program, our philosophy, our backbone, practically that part, that group of employees and the population must bear at the expense of a greater fiscal burden than 94.5% of employees and Albanians.
The reintroduction of a the flat tax system would inflict three main things; it would increase the fiscal burden on the middle class and the low-income families, but it provides relief to two groups from a considerable figure, including the dividend, and I am convinced you all remember the debate over the dividend. I would make a rhetorical question to explain that point of the draft program.
What is the reason that that state budget will lose around 53 billion lek or $530 million in its revenue if a flat tax rate is imposed, and therefore the state budget won’t be able to support investments in hospitals, it won’t be able to support reconstruction, which is not included in the opposition’s program at all, and all these amounts of money would end up in the pockets of large companies. What is the reason?
The reason is quite simple. It is practically the philosophy of two major political forces. One that bases its program on social support, progressiveness and another that focuses on 3%.
All this discussion about the so-called oligarchs, I apologize as I can’t help but say it, a political hue and cry, but these papers, as you all might see, based on this draft, around $530 million each year will end up to the coffers of the big companies and this amount will be taken away from the citizens, the state budget, the investment funds for hospitals, the efforts against the pandemic and the reconstruction programme.
Second, what is really weird, the opposition has proposed to lower the social insurance contribution to 18% from 24%. This is extremely weird to any professional and is not calculated. To put it simply, this would mean that there would come a day when Albanians will be denied a pension payment and therefore it is a big lie, a big joke, a lack of seriousness towards Albanians, despite the correctness I would try to adopt regarding this serious issue. So it practically causes the deficit of the pension scheme to almost 830 million dollars, but we correct the figures with decimations, if you will, it would completely ruin the reform. So, if you contribute today, you are not guaranteed every Albanian that tomorrow all 643-650 thousand pensioners will have their pension guaranteed.
In addition to this, including the proposed tax cuts, I would put it bluntly and through a simple language, I am ready to face you and everyone else through detailed and analytical figures regarding every proposal they have tabled, but I would tell only this: for this program to work, the country’s economy should grow by 25%, and I am telling you that given Albania’s normal growth trajectory estimated at 5 % or 5.5% growth, Albania would practically go bankrupt in the second year of their potential but impossible term in office. However, I would dare to go beyond correctness and make a comment, as I recall the slogan of the previous DP government, which had partnered with “Sude”, “everyone wins with us”, but whole Albania was to lose back then.
The Premier reminded me of your question. The 23% tax on personal income is actually applied to salaries of 4 million lek and, upon the Prime Minister’s request, we are reviewing the tax rate on these groups, but, in the progressiveness aspect, a high tax rate should normally be imposed on a monthly salary over 4 million lek and practically the income tax rate is lower when it comes to optimum salaries, and this progressive tax rate is applied to 8% or even 3% of the employees. Your question focused on the legitimacy for 8 to 3% of the employees, the Prime Minister answered for 95% of the employees referring to that salary.
PM Edi Rama: So, no 23% tax rate is applied to wages of 1,6 million lek. I have happened to come across this repeatedly. It is like many intentional inaccuracies, suggesting that a 23% income tax rate is imposed on salaries of 1.6 million lek. This is inaccurate. I am not calling it a lie, because you don’t deserve such a word, but those who claim so are merely liars. Or they are unable to do make calculations and even when they make calculations, they do so just for political purposes, hoping that as many as possible people would trust them. And they repeat their lies constantly in order to make many people trust them. But it is completely different. We are mulling plans to review the progressiveness structure when it comes to the personal income of the category of employees you just mentioned, but without forgetting that the 23% rate is applied to wages over four million lek and not to wages lower than that.
– Given that we are discussing precisely these issues and you talked about the progressive tax, how much specifically the personal income tax rate will be reduced? The second question has to do with the Donors’ Conference, a year after the Conference in Brussels. If we are to take stock of that Conference, how much money did we receive in total and how much is invested?
PM Edi Rama: As far as the second question is concerned, I would apologize you but you need to look again at the presentation that the Minister just provided and it included all the data and if you are to review it, you would also find the figures you just asked about, because it is impossible to constantly repeat the same answers.
As far as the tax system, we are not going to engage in no campaign of whatsoever for the tax system. We keep reiterating what we have already stated at the very onset: Who earns most will pay more in taxes, and who earns less will certainly pay less. Given that the government and our political force have been consistently accused of efforts to protect the oligarchs, as they prefer to call businessmen, we would in no way allow that around $530 million end up in the coffers of big companies or the oligarchs, as they term them. This is for sure. We won’t allow that $530 million, earmarked for investments in infrastructure, schools, hospitals, salary and pension increase projects, end up in the pockets of these companies or individuals, just like it was the case before we took office and this will the principle at the very foundations and the core of our government.
Zero tax is applied to small businesses under our government. No country in the region has such a tax rate on small business; let alone Europe, where imposing such tax rates is out of question, because Europe applies very high taxation rate and that’s why it can afford doing that many call to be done in the blink of an eye here, forgetting that half of the income and revenues in Europe is used to pay taxes and contributions, but neither we can nor we should compare with Europe. We should compare with the region. No country in the region applies zero taxes to small businesses. We have scraped the profit tax and the Value Added Tax for businesses with an annual turnover up to $100.000. And such a reality was unimaginable just few years ago. Yet this is a reality just because we have successfully consolidated the state’s financial base. The rest of the small business operators with an annual turnover of $140000 pay zero profit tax and they understandably pay VAT.
What are they proposing? They are proposing a 9% tax rate in the big companies and once they propose a 1. 5% tax rate and then 0.5 tax rate for the small businesses. What for? Are they proposing it so that they can bring back the tax inspectors again, just like it was the case in the past? We have entered a phase, where we are seeking to eliminate any physical inspection actions by tax inspectors at small businesses. Small business, just like it has been freed from the profit tax and VAT, will now be ultimately free from the door-to-door visits by tax inspectors, who may impose fines and ask for bribes. The opposition is proposing to restore them again.
However, the good news is that all their proposals will turn out to be useless, because such a program, which is embodiment of the weak character of the DP leadership, stands no chance of whatsoever to be implemented any time in the near future. Not only because – even if they were to ever take office – they won’t be unable to implement such a program, as it is merely undoable, and because it would collapse the state totally. However, they won’t cease power. So this is something that will simply fizzle out. But, in respect to your questions, we are here to provide answers, always on the understanding that Elia will make sure that the today’s topic won’t be shunned by the TV channel where she works.
–When do you plan to reveal to the public your program, as you seek re-election for a third term in office, and if you really have one for the citizens to have the opportunity to compare the governing majority program and that of the extra-parliamentary opposition?
PM Edi Rama: It is quite simple for the citizens. All they have to do is just compare the characters and then the programs, of course, and then take stock of what has been done and who can do a lot more. However, it all starts with the character of everyone, the character of the leadership and the character of the political parties. I think citizens always bear this in mind every time they cast their ballots. Of course, the programs will take their time and we have long ago announced that we will share with citizens a platform for Albania 2030. This is because we are in the conditions when we can’t talk with the citizens about an electoral program so that we can take over the country’s affairs, but we need to discuss a vision and the progress of the country’s affairs, based on what has been already done and accomplished, which are absolutely insufficient compared to what has to be done and share with the citizens our conviction that we are the only ones capable of doing what the citizens wants, we want and we all together want. I hope we will have the opportunity to share this vision with the citizens soon.
– Most recently, you have levelled some critics against the EU regarding what we can term as “egoism” the EU has demonstrated when it comes to the way how the COVID-19 vaccine was distributed. However, the member of European Parliament´s Foreign Affairs Committee has reacted by saying you shouldn’t slander the EU and instead you should fulfil the conditions and he listed some of them, pointing out that the June 5 agreement had been violated, the law on the media has not been improved; officials involved in election manipulations have escaped prosecution; the constitutional legitimacy of the 2019 local elections has not been certified and that the money laundering activities are a matter for concern. How would you reply to his statements?
PM Edi Rama: I don’t know who this person is and I have no reasons to respond to his statement. I have no idea at all.
Now that you introduced him, if I will have time, I would try to learn more about this person, but by always referring to what you said, because I don’t know him and I always refrain from taking citations for granted, and everything you listed are all fairy tales. They have nothing to do with the reality and of course I have no comment to make about it. What I would like to add is whether there is any connection between all these and what I have stated about the vaccine. Would you please find out any relevance or correlation between all these and the vaccine? Is there any correlation between the vaccine and the 2019 local elections? Where do all those other fables, an old tune we have constantly heard and are used to, correlate to those who receive biased information from Albania and actually get it through the DP channels?
Meanwhile, should you be involved in all this? Who are you with? Are you in favour of the necessity for Albanians to receive the vaccine, or are you standing by the European Parliament’s coordinators, who deal with stories totally irrelevant to the vaccine? Are you worried that the EU is being slandered, but what slander has been used in this case and how could one possibly use the term “slander”? If we are to talk about slanders, all you said here are actually unfounded slanders against our country. But I am not blaming the EP coordinators for all these. I know pretty well who is to be blamed for them. It is those who seek to tarnish Albania’s image abroad and are seeking to take office through pseudo-programs, but who are a serious insult to the intelligence of all people, who know how to make two simple calculations only.
I haven’t slandered the EU. I have simply said what everyone is saying today. Are coming across what many say in Europe and certain European countries when it comes to the vaccine? Or have heard what the European Commission President is saying? Is she slandering the EU and Europe too? Why we – I in this case though I don’t speak for myself and my own family, but I speak for you – are slandering? When we comment and speak with one another about the party programs, it is completely normal that I comment about another party, you comment about another one, but when we speak or when I speak I do so for other, I do it for you too. This is the difference between countries with serious politicians and serious political parties and the countries where the politics is a circus with an endless and unlimited number of funny men. When I speak about the vaccine, this is all about for my country and people, this is about our own people, for your grandma and grandpa, for your parents, and this is about a situation that was not caused by us, it was not caused by Albania, but it was triggered because of a short-sighted approach and policy and these are its outcomes. There is no need for any European Parliament coordinator to defend the EU from me. There is no need for that. I can defend the EU better than any EP coordinator, be them German, Dutch, Spanish or whatever else when it comes to the devotion to the European project, the commitment to the European path and the respect for the EU.
But they are used to speak this way, because they are unfortunately supplied by Tirana, fed by Tirana, and they are supported by Tirana. This is why they are used to issue such comments, yet they have the minimum of ethics when they do so. Who is he talking about? Is he talking about any of his friends? Is he sitting a café in Babrru or is he in Brussels when he points to the conditions and the preconditions when we talk about the population’s health and the vaccine?!
What is he telling us? Is he telling us we don’t deserve the vaccine, because we haven’t agreed on the 2019 local elections? Or is he telling us that we don’t deserve to receive the vaccine just like everyone else in Germany, France, Belgium or elsewhere, since we haven’t agreed on the June 5 deal? These are unbelievable nonsense. And it is regrettable that all these nonsense is a Made in Albania product and not Made in Germany. This is biased disinformation and manipulation.
Which June 5 date is he talking about, since the only date I recognize is June 1, and I don’t know whether there is another holiday in June. What does June 5 represent? Why should an EP coordinator be worried about worthless dates, adding the expressing “don’t slander the EU?” What are here? Are we supposed to go silent when we see a fact through our own eyes? I have stated and I reiterate, not for myself, but for you as Albanians. Don’t forget that you are Albanians first and foremost and then you are journalists, and you are then employed in TV channels owned by individuals who push you once to the left and then to the right. But, first and foremost, you are Albanians and should demonstrate more dignity as Albanians. Don’t give so much voice to every sort of individuals, who are totally anonymous in their own countries. They pretend to be personalities, who can tell us how Earth revolves, where the EU is located, and where is the Moon. It is regrettable. In no country happens what you do to your own country and of course it is not you blame for this. You are the accomplices who take part in this huge buffoonery staged against Albania by some politicians who are seeking to seize power at all costs. They can tear Albania to pieces for power, every time they open their mouths to tell half-truths that are the biggest lies and to tell completely untrue things that are the dumbest lies. What do you earn from this? Do you earn “likes” for the websites, or audience for the ads?
And this is not personal, but I am addressing to each and every one of you. Take a look at all media outlets in the region and just tell me a single country in the region, facing same problems, where completely anonymous or little known individuals, who are unknown in their own countries, become public personalities and join the government heads and presidents in press conferences. They could be completely unknown people, or second hand or third hand individuals in their countries, who hold a certain position, and we respect them and we don’t deal with them. Why do they deal with us all the time? What are they seeking to tell us? Don’t they have anything else to do instead? Why do they kept being fed by constant disinformation from here, why do they enjoy support here and being used and misused by individuals from here?
As for the next question; when you comment on the reconstruction program deadlines, you Ambrozia should bear in mind two things. First of all, the time between our commitments and the time when the COVID-19 was spread, delaying many of the processes. Second, when you comment on reconstruction in Albania, you don’t need to go too far, but take a look to the neighbouring Italy. What is happening with the post-earthquake reconstruction programme in Albania is a success story along the entire chain of the process. An increasing number of quake-affected families are enjoying and will be enjoying this success story as they are now moving into new houses they hadn’t imagined even in their dreams; they are returning back to schools that had never imagined to meet contemporary education standards just like the best schools in the EU member states; the families that are repairing and retrofitting the interior of their apartment houses that have been now totally transformed; those who will soon move into the new apartments already being constructed. This is what matters to me. While when we mention deadlines, you should bear in mind that COVID showed up and it caused all the processes around the world to be delayed and not only here in Albania.
-You said that the new educational facilities are being rebuilt to meet the highest European standards, but indeed you are building the new structures based on the legislation dating back to 1978 and 1989. Does it ensure that the new buildings will be safe enough? I mean, are they seismic-proof buildings, given that they sustained damages because of such a phenomenon and we haven’t been informed about new pieces of legislation and safety regulations that apply to construction.
-You said that the government has cut the progressive tax rate. Why precisely now? Which has been the earlier effect of this tax that you are deciding to cut now, or is it merely a return to the tax system you adopted during the first term in office?
PM Edi Rama: Which progressive tax has been decreased?
–The progressive tax on personal income. You said that the personal income tax rate is 18%.
PM Edi Rama: No, this is not true.
–Is this change being made for 3% or 8% of the population only? Or 3% or 8% percent of the employees, to be more precise?
PM Edi Rama: No, this is not true.
– Which is the truth then?
PM Edi Rama: The truth is that nothing has changed.
–You just mentioned the changes to the tax rate on the personal income, affirming that an 18% tax rate is applied to the salaries of 1.5 million lek and 23% to the salaries up to four million lek. Am I correct?
PM Edi Rama: No, you are not correct.
Minister Ahmetaj: The effective tax differs in its technical financial definition and the logic between the legal burden and the effective burden.
PM Edi Rama: It is not me the one who should tell you how to best do your job, but you should take notes and listen carefully and you should not persist in error and don’t quote persons in front of you and who tell you this is not true. This is because the explanation I provided was for Elja, to tell her that it is not true that the 23% tax rate is not applied to the salaries of 1.6 million lek but to salaries over 4 million lek. Nobody said that changes have been made in this aspect, because no changes have been made indeed. Not only that, I even said that we don’t plan to base our electoral campaign on other tax changes. I said we are mulling the ways to impose a more flexible rate when it comes to the progressive tax on the personal income, but this is not being said for first time today, and this is not a pledge as part of the electoral campaign.
The choice is pretty clear, either the state budget amount of $ 540 million will end up in the pockets of the big companies of the so-called oligarchs, or $ 540 million in the state budget will be allocated to support construction of new hospitals, schools, for everything, as it is the case today.
We won’t alter the taxes for the big companies, whereas we have cut the tax rates on small business. We have scraped taxes on small business, while it is Lulzim Basha and his Democratic Party only that can further cut taxes below zero. We won’t allow any tax above zero though the opposition is proposing exactly that. My grandmother used to say: “To err is human to persist in error is diabolical.”
– The other question about the legislation and the safety regulations that apply to construction. We are talking about standards in construction, Mr. Prime Minister.
PM Edi Rama: Yes, we are talking about exactly that and the schools we are building meet high European standards.
–I have two questions about the main region, where the highest number of reconstruction projects is concentrated, Durres. First, you said you owe a great deal to Durres. Could you please elaborate what do you owe to Durres, where, as you hinted, you plan to announce your candidacy there too and, in this regard, given that you plan to announce your candidacy in two districts simultaneously, are you taking into consideration the last Venice Commission recommendation for the party leaders to refrain and not to take advantage of this new legal space?
In 2017, you launched a broad electoral campaign under the motto “let’s send the Socialist Movement for Integration to get scrapped.” Meanwhile, it was most recently when leading SMI officials have been welcomed by you to join your party, including two long-time important ministers, namely Lefter Koka and Nasip Naço. What is happening? These individuals are abusive ones when they are close to Mrs. Kryemadhi and Mr. Meta, while they adopt completely different features when they join your party. How this perception change takes place?
PM Edi Rama: Have you ever heard me saying that these individuals are abusive ones?
– They were part of the government. They are cabinet members in your government and represented their party, but if you understood it wrong, I can backtrack on it.
PM Edi Rama: You should actually backtrack without me accepting the blame, but you accept it instead. Sending SMI to get scrapped, practically a joint project with Lulzim Basha, but betrayed by Lulzim Basha. I haven’t betrayed that project, and I still believe in that project. Lulzim Basha has betrayed the project, because it was him who shared the indispensability with the Democrats to send the SMI for scrap, it was him who vowed not to forge deals with the SMI, yet he is today a shareholder of an enterprise among four partners, where he is the partner of a minority indeed, because Ilir Meta and Sali Berisha are actually the biggest and the main partners. In a nutshell, you have wrongly imposed this opinion. SMI is a project that should be undone. This is not a matter of individuals. I have always believed, I have believed previously and I still strongly believe that it is not the individuals who corrupt the system, but it is the systems that corrupt individuals. Same people behave differently in different systems and you have ample evidence to it. It would suffice for you to change the TV channel you work for and you would find yourselves to be completely different people. I believe SMI is a system that should be completely disassembled. I believe, I have always believed this.
As to the debt I owe Durres, this has to do with my origin, my life and my personal memories in Durres. Of course it has also to do with the fact that Durres has a tremendous yet untapped potential and given that Vlora has made incredible progress, Durres seemed to be unjustly lagging behind. It is not lagging behind a lot, but it still needs a fresh impetus. This is the debt I owe in personal sense and in terms of our big common interest, not only in terms of Durres citizens’ interest, but also in interest of whole Albania. Durres has the potential to turn into an irreplaceable economic engine of Albania. We have actually laid the foundations for a strong transformation in Durres. Durres faces a lot of problems, just like Albania faces in many sectors, but if we are to look back the situation in Durres just seven or eight years ago, we would see that the change is considerable. So, it is time to give a fresh impetus to Durres and, most importantly, we can no longer speak in the way we used to speak four or five years ago, when things were merely a vision or an idea. We are now talking about materialization of this vision and ideas. Transformation of the existing Durres port, which is a gangrene right at the heart of the city, into one of the largest tourist ports in the Mediterranean, with an investment worth over 2 billion dollars in the construction process only and construction at the same time a commercial port of Durres on the other side of Durres, with the new port’s standards 100% higher than the current unacceptable standards, adjacent to the new economic zone, which is no longer merely a vision, an idea, but it is a concrete opportunity, two development centres that will take Durres to a whole new level, and will also have an impact on the country’s mainstream economy. This is not about merely a physical transformation or an incredible amount of funds set to be invested at a certain moment or period, but it is about a generator or a source of quality employment and high-paying jobs. Likewise, it is an economic generator through the transactions due to take place in all these spaces. All these projects will have a tremendous impact. This is a strong impetus we will primarily focus and turn into a top priority for development of Durres in the four, eight or 10 coming years.
–Have been the quake-affected families provided the due construction permits to carry out repair and reconstruction works and are these reconstruction projects being monitored for the work quality and safety standards?
-Few days ago, the Ministry of Foreign Affairs announced it has expelled a Russian diplomat from Albania. Could this decision be a cause for a conflict between the two countries?
Minister Ahmetaj: All these new constructions are being monitored by the local government authorities and the implementing units based on the Article 6 of the Law on Urban Planning.
PM Edi Rama: I have no comment on this. I see no reason for rising tensions between the two countries. It is an unfortunate case and the decision has been made for reasons that have been announced publicly. There is no cause for alarm that a conflict between the two countries could escalate.
–Allow me to quote you. A day ago you said that you do not prejudice the Russian and Chinese science when it comes to the COVID vaccines, yet would seek to secure vaccines from the globe’s Western flank. However, this is about the citizens’ lives and 13 people died last day only. My question is: Are you playing a game and thus putting lives of many people at risk just for the sake of geopolitical interests, or people are merely sacrificial pieces in the chess game you already said you are playing in the negotiations for the vaccine? Thank you!
PM Edi Rama: The two are totally irrelevant to each other, because the vaccine’s impact is not that immediate as to count the lives unfortunately lost a day ago.
To put it bluntly, the vaccines produced by the Eastern countries are not available in the blink of an eye. I mean, the vaccines are not there behind the door and we have closed the door to them.
We have chosen the vaccines produced in the Western flank, because we are part of the European family. We are part of the European family without playing on both sides.
Be assured that we are implementing our plan. The created delays have nothing to do with us, but it is a delay that won’t hopefully be chronic. Late last night we received a confirmation from Pfizer that it will deliver the next shipment of its vaccines by mid-February, namely the quantity of the vaccine doses it had pledged to deliver by end of January and February, and, based on the last night confirmation the shipment will arrive within February. In the meantime, we are negotiating with the pharmaceutical company AstraZeneca. Therefore, such correlations are completely irrelevant.
– Actually, I would like to somehow clarify a bit, because it is either we have misunderstood you, or you have misunderstood us. The current law on the progressive tax stipulates that zero income tax is applied to the wages up to 300.000 lek. The income tax rate on wages ranging from 300.000 lek to 1.5 million lek is 13%, whereas the tax rate on wages over 1.5 million lek is 23%. Could you please explain why do you claim that the 23% rate is applied to salaries over four million lek? Is there a misunderstanding about this?
PM Edi Rama: No, there is no misunderstanding. It is pretty clear. The Minister can explain it again.
Minister Ahmetaj: Zero tax is applied to wages up to 300.000 lek. For higher wages, let’s say 400.000 lek, an effective tax rate of 1% is applied to the 100.000 lek only, although the reference tax rate is 13%, but the effective fiscal burden is 1% only. It was once only 0.8%. The same applies to the wages of 1.6 million lek. Moving to each category by, say maybe up to 100 – 200 thousand employees in increased wages, the progressiveness in the calculation has a difference between 23%, which is the nominal with the real effective load, because the categories are taxed based on the difference, which is from 300.000 lek. It is an arithmetic exercise, but I would like you to realize that the effective and nominal burden are two different things in the case of the progressive tax. If you are to ask someone with a 400.000 lek monthly salary – which is let’s say the minimum wage in the public administration – he would never say that the tax rate applied to his monthly income is not 13%, but 1% only.
PM Edi Rama: So, if the wage of 300.000 is the base is for the zero tax rate and if what you mechanically read, the tax rate applied to the wages ranging from 400.000 to 1.6 million lek is not 13%. So the tax applied is the 13% of the amount of 100.000 lek or 1.3 %. It would suffice for everyone to calculate the tax applied to your own salaries, the declared ones of course. Do the math regarding the declared salary you receive each month and you would find out it is not 13% of what you receive, although you belong to this category.
Did we understand or do we still need to explain it? This is because a financier explained it, a painter explained it, but if we still have to do so, then we have to call an actor, but the actor will confuse you, as he has done to date.
–Why did you decide to review the concession contract on Rinas airport ahead of an electoral campaign and renegotiate the terms under the contract, which is the duration of the concession?
-Mr. Basha has vowed to cancel this contract as soon as he takes office, arguing that the contract violates the law. Do you have any comment on this?
PM Edi Rama: I remember once I was making a condolence visit along with Fatos Nano, who served as Prime Minister back then. A person, who was also present there, suggested PM Nano to cut it short and expropriate all villagers and return the land to the former land owners only and this would be the way to address the property and land issue in Albania. Fatos told him: “Your idea is really ambitious, yet it can be done by Sabri, who has no power to do so. This is also the case with Luli, who pledges to do everything he can’t, but he will do them. I am convinced about that. It is for sure he will do everything he hasn’t under control, and he would tell you he is the only one to do them. Because he has nothing under control.
