Economic expert Merab Janiashvili asserts that Government has diminished Estonian mode’s positive aspects by raising excise tax.
In reality, Government will replenish budget gap from pocket of our citizens, Merab Janiashvili told Tavisufleba radio station.
“Potentially positive economic affects of Estonian Model have been neutralized. What does the Estonian Model imply? Government raises less finances from economy. Consequently, more financial resources are maintained in economy and economic activity grows in this way. And what has our government done? Government has said not to collect 500 million after reinvestments, but it plans to raise twice more amount from economy. What is the effect of similar decision? This is nonsense.
Positive affect of Estonian Model is that major entrepreneurs who are able to make reinvestments will make serious benefits and will not pay 15% tax, but small entrepreneurs who depend on monthly revenues cannot afford to make reinvestments. As a result, Government has acted on behalf of major entrepreneurs, having collected financial resources from citizens and increased excise tax on oil products and tobacco products. What does this mean? Do we give more preferences to the rich and make the poor poorer?
When you establish Estonian model and expenditures shrink, you should cut expenditures and this component should be financed through external debts, because internal borrowings are taken out from economy. I think our government has a certain inhibition of expanding state budget every year, even if revenues decline. State budget expansion does not mean revenues also grow.
When Government grows fuel tariffs, this is a radical step, because this decision raises prices on other products too. What justifies excise tax growth on oil products? Oil products non-manufacturer countries try to lower taxes to make fuel cheaper. I do not know whether Government wants vehicles to be affordable for only state officials. This decision will genuinely reduce fuel consumption, because higher fuel tariffs will make taxi and minivan taxi service more expensive. Therefore, I do not know why Government has taken this decision”, Merab Janiashvili said.