Tax Evasion Arrests Strike Fear Into Albanians

Albanian police on Thursday said they had arrested two hairdressers for working in a side-street shop in Tirana that was not registered with the tax authorities.

According to police, Taulant Hasanaj, 29, was arrested for resisting a tax inspector while Indrit Lluka, 33, was arrested for "conducting an economic activity... unregistered in the tax office."

In a separate action, police stopped several trucks transporting cattle and said they had opened proceedings against the traders.

News of the arrests gave new meaning to the much anticipated government campaign against the informal economy and tax evasion, announced with great fanfare on 1 September but which was then postponed for about a week when the authorities found themselves unprepared.

In Elbasan, 40 km south of Albania, some farmers have had their tobacco confiscated by the authorities who say the illegal but until now tolerated trade in domestic tobacco is harming government revenues.

In a separate development, the government has presented a new set of harsher measures against tax non-compliance, with changes in the criminal code. The new proposal states that fiscal evasion will result in jail terms of up to three years. Businesses may be fined up to 10 million leks (80,000 euros) if they sell goods without a receipt or fiscal bill.

The informal economy in Albania is estimated to be worth at least 35 per cent of the whole economy. There is a general agreement that fighting fiscal noncompliance is necessary but many see the new measures as disproportionate and ineffective.

Some note that no senior official has ever been jailed for such corruption although corruption is perceived as widespread and even though much fiscal evasion is perceived to be the work of big...