Speech of Prime Minister Edi Rama in the presentation of the program of cooperation with USAID to improve the efficiency of tax administration:

Thank you for this invitation. I deem this cooperation to be very important because it comes at the right moment, when the country, although – as the Secretary of State said – it is in the right direction, still needs to walk at a faster peace, and specifically, in the fight against informality.

I’ve always liked a quote by Oliver Wendell Holmes Jr. Who said: “I like to pay taxes, because with them I buy civilization.”

I’ve been and remain convinced that the sooner Albanians, all of them, pay taxes, the sooner we will be able to buy the civilization all of us want for our children. And for this reason, it is particularly important that USAID, in cooperation with the Directorate General of Taxation, work together this year to further improve the internal process of tax administration, addressing every aspect that needs to be reorganized or restructured.

When I looked at the notes that my staff prepared for me, they made me laugh because this program will be implemented by the Financial Services Volunteer Corps, an organization founded on the initiative of the President of the United States, but that is at the same time a public – private partnership. So, the President of the United States has allegedly granted this service as a concession. I would ask our Americans friends who are here who have come from afar to not get the translation wrong, as this is in the context of the Albanian political debate.

This is a public – private partnership that provides a very valuable assistance to create sound financial management systems in countries that are in a transition phase or have emerging markets. If we talk about our tax administration structure, it is really an administration in transition, from a chaotic stage full of arbitrariness and corruption, in a new phase where professionalism, the spirit of close cooperation and respect for entrepreneurship should dominate.

During the past 25 years, more than 8500 experts from the financial, legal and international regulatory communities have participated in 2700 FSVC missions. And this makes even more enthusiastic our welcoming for our American friends that will certainly help us a lot to qualitatively deepen the reforming of the tax system administration, something we started in 2013, but about which we are aware that we have still a lot to do.

We still have much to do, because we have to qualitatively change the mentality of all of the tax inspectors and also to all of those who are part of the team working at the centre. If I were to be blunt and exaggerate a little – not much – I would say that we have inherited a tax administration that works brainlessly. It works only with the eyes, the ears and the force. Meanwhile, the effort started in 2013 aims to have a tax administration that works primarily using the brain, and whose main priority is to serving the enterprise, not hunting for entrepreneurs.

 

The reorganization launched has led to a very substantial increase in revenue. In fact, if we take as an absolute value only the 9 months of last year, which was an extremely difficult year because of the planning done with great ambition and optimism, and of the international conjuncture of oil prices, or of the domestic conjuncture of the power production, despite this we have 34 million Euros more than in 2014, and 242 million Euros more than in 2012, which was the best year in the collection of revenue, before we took office.

On the other hand, let us not forget that in 2013 we inherited a hidden debt of 720 million dollars, which was precisely a debt to companies. Companies harassed by the tax administration and abused by the government which had taken from them 720 million dollars to lend its electoral campaign. We paid this 8-year debt within two years, as a cornerstone for a new relationship with the enterprise. If today we have a debt indicator of 69.9% if we exclude the amount of arrears settled, the debt is 64, 6%.

The biggest challenge that makes this day so important, and made inevitable my presence here, in order to give maximum support to this interaction with the presence and support of USAID, is the operation against informality. Thanks to this operation, we have today 33% more active businesses than we had two years ago. Thanks to this operation, 627 thousand employees have been enrolled as of today, while 2 years ago we had only 471 thousand. Thanks to this operation, we were able to take some very important steps to facilitate small business, and we can take some other steps to further facilitate entrepreneurship.

But it is important for the operation to be carried out thoroughly and to not be just a punitive one; it certainly must be punitive, but it must be also a process of radical transformation, both of the tax administration and of the relations with the enterprise. Which means that the biggest beneficiary of this operation against informality should be the entrepreneur. The entrepreneur who regularly pay taxes, and who has been for years affected and threatened by unfair competition, and by the illegal relationship between dishonest competitors and the tax administration.

We are very determined to carry forward this operation. We are very determined to punish, as we have been doing so far, any inspector or director of the tax administration involved in corrupt activities, or in activities that are contrary to the purpose, objectives and the spirit of this operation.

On the other hand, this support will consist first of all in an increased analytical capacity of the tax administration and the management team. This is music to our ears, because it is precisely here our main challenge, namely to have the administration carry out analysis in detail, and on the basis of analysis build a completely different relationship with the business – which is something that has already begun – not based on the endless and often unpleasant control for business, because they hinder the normal business activity, but analysis based on risk and on reasonable conclusions. This allows the controlling power of the administration to be much greater, and the controlling energy to be consumed in a much more reasonable way, so that it won’t be a big mutual consumption, whether for administration or for business.

I am convinced that there are still many reservations. January data are very encouraging, again, but reservations are still very high. I have every reason to believe that with the assistance of the American partners, we will be able to use very successfully the great potential of the fight against informality, if it is done wisely, with integrity and high professionalism.

I do not think therefore that there is anything left to be said other than to welcome you to Albania and to express the full support of the government, mine, of the not yet decreed Minister of Finance, and of the tax administration, for all the teamwork that is to begin very soon.

Many thanks.

***

The new program of technical assistance to improve the efficiency of tax administration in Albania is the fruit of cooperation between the United States Agency for International Development (USAID) and the Directorate General of Taxation.

The technical assistance program is funded by USAID and implemented by the Alliance of Volunteers for Economic Growth (VEGA) and the Financial Services Volunteer Corps (FSVC), as the main implementing partner.

The program will rely on high-impact assistance that FSVC has been providing to the Albanian financial sector since 1999, and on the broad experience in supporting governments of other developing countries to strengthen public financial management.