| In the previous article, we described the
| |
| | de-regulation of prices and the abolition
|
| various methods developed in the West to
| |
| | of subsidies.The state must exit forgo
|
| cope with the ever-burgeoning public
| |
| | all levels of intervention in the
|
| sector.Yet, economies in transition
| |
| | finances of the public sector. It must
|
| everywhere in the world have learned a
| |
| | not fix the prices of its products and
|
| lesson the hard way: not everything that
| |
| | services and it must not subsidize it.
|
| is Western - necessarily fits their
| |
| | Subsidies and tax incentives thwart and
|
| needs. Many Western techniques, methods,
| |
| | distort the true economic and financial
|
| systems and ways of thinking cannot be
| |
| | picture. They hinder the proper and
|
| applied in Macedonia, for instance.The
| |
| | correct valuation of the public sector
|
| public sector is a great burden on
| |
| | firm by prospective investors.An investor
|
| economies everywhere.It is mostly
| |
| | must feel certain that he will be allowed
|
| financed by collecting taxes from
| |
| | to fix any price for the goods and
|
| individuals and businesses.Taxes are
| |
| | services sold by the public sector firm
|
| re-allocation of economic resources.
| |
| | that he is buying. This is the way to
|
| Taxes are nothing but money transfers
| |
| | profitability and financial health. The
|
| from one group of citizens (the
| |
| | government does not need to worry:If the
|
| taxpayers) to other groups: to those who
| |
| | investor will charge too high a price -
|
| cannot pay taxes (such as children and
| |
| | his clients will go to his
|
| the elderly) and to those who would not
| |
| | competition.But what if there is no
|
| pay taxes, the tax evaders. Taxes are a
| |
| | competition? What if electricity is
|
| penalty paid by the more productive and
| |
| | supplied by only one electricity firm (a
|
| honest segments of society. Small wonder
| |
| | monopoly)? Who will the client revert to
|
| that taxes have a bad reputation in the
| |
| | if the prices that he is charged are much
|
| West. They are considered to be both
| |
| | too high?This, precisely, is the third
|
| unjust and inefficient.But taxes are both
| |
| | condition:The opening of the marketplace
|
| necessary and inevitable. There is no
| |
| | to competition, both domestic and
|
| better way to finance the operations of
| |
| | foreign.To cancel all laws, regulations,
|
| the government and of the public
| |
| | rules, precedents which inhibit or
|
| sector.The more taxes collected - the
| |
| | prohibit competition. To eliminate
|
| heavier the involvement of the state in
| |
| | tariffs, quotas, permits, licences and
|
| the economy. This involvement is measured
| |
| | controls (barring those which relate to
|
| as a percentage of the GDP - the Gross
| |
| | public health and to the protection of
|
| Domestic Product. As we mentioned in our
| |
| | the environment).Why should Macedonia
|
| previous article, the figures are
| |
| | have only one PTT? Why not six
|
| frightening: governments consume from 19%
| |
| | providers?Why not allow anyone to produce
|
| (Singapore, Hong-Kong) to 59% (France) of
| |
| | electricity and sell it to the
|
| the products and services produced in the
| |
| | electricity company? Why to have only one
|
| economy!Research shows that public
| |
| | electricity company?Subject to the right
|
| spending of tax money is 6 times less
| |
| | regulations concerning safety and
|
| efficient than the same money invested by
| |
| | financial wherewithal - everyone should
|
| the private sector. The two sectors: the
| |
| | be allowed to do anything. Economic
|
| Private and the Public compete on the
| |
| | history shows that competition provides
|
| same, limited, amount of resources. Every
| |
| | better goods and services at much lower
|
| Denar paid to the tax collector is one
| |
| | costs.It also shows that the public
|
| Denar less invested in the formation of
| |
| | sector is a potential hub of inefficiency
|
| new businesses and one Denar less
| |
| | and sometimes blatant corruption."Lean
|
| invested in private consumption.We can
| |
| | and Mean" is the name of the game in
|
| safely state that taxes inhibit economic
| |
| | today's economic environment.The Public
|
| growth and increase unemployment.So the
| |
| | sector is fat and sluggish. It has no
|
| current mood in the West is anti big
| |
| | right to continue to exist.Even private
|
| government and anti taxation.People evade
| |
| | sector enterprises are "downsizing"
|
| taxes. About 13 - 25% of the total
| |
| | (cutting their labour force
|
| capital in the world is "black" capital,
| |
| | considerably).But certain functions can
|
| upon which taxes were not paid. It is
| |
| | scarcely be transferred to the private
|
| estimated that Macedonian firms and
| |
| | sector. These functions are inherently
|
| individuals hold more than 1 billion USD
| |
| | non-profitable and non-profit motivated.
|
| in undeclared cash - against an official
| |
| | They are usually performed by municipal,
|
| figure of 200 million USD in circulation
| |
| | local and regional authorities.The
|
| in the whole Macedonian economy.People
| |
| | municipal (local) and regional part of
|
| openly refuse to pay taxes and they take
| |
| | the public sector has five sources of
|
| their governments to court on these
| |
| | income at its disposal:It is empowered to
|
| issues.Governments are doing their best
| |
| | collect taxes from individuals and from
|
| to simplify procedures and tax returns
| |
| | businesses - the size of which is
|
| (=the forms on which income is
| |
| | normally linked to the (residential or
|
| reported).In fiscal theory, we
| |
| | office) space that they occupy.It is
|
| differentiate between progressive and
| |
| | allowed to collect fees and charges which
|
| regressive taxes.A progressive tax is one
| |
| | are fixed and relate to the provision of
|
| which is larger - the larger the income
| |
| | services such as: water supply, sewage,
|
| is. A millionaire in a progressive tax
| |
| | sanitation, posting commercial signs,
|
| system will pay much more (as a
| |
| | parking and toll roads).It is authorized
|
| percentage of his income) than his
| |
| | to levy fines on transgressors against
|
| driver.A regressive tax is one that
| |
| | municipal rules and regulations. The best
|
| totally unrelated to the level of income.
| |
| | known form of this kind of financing is
|
| Both the millionaire and his driver will
| |
| | the parking ticket.Mainly in the USA,
|
| pay the same percentage of tax if they
| |
| | local authorities are permitted to sell
|
| buy a car, for instance.Governments have
| |
| | municipal bonds ("Munis") to the public -
|
| become desperate. They introduce one rate
| |
| | through the Stock Exchange - and directly
|
| income tax systems: all incomes are taxed
| |
| | to institutional investors, such as
|
| at the same rate, regardless of their
| |
| | pension funds.The local authority which
|
| size. They are switching from taxes on
| |
| | issued the bonds pays the bondholders
|
| income (which are socially progressive in
| |
| | from current income generated by tax
|
| nature) to taxes on consumption (such as
| |
| | revenues and from specific incomes
|
| VAT - Value Added Taxes) which are
| |
| | generated to it by specific projects.An
|
| socially regressive in nature.The overall
| |
| | example: a local authority wants to
|
| goal is commendable: to lower the burden
| |
| | establish a water treatment facility.It
|
| of taxation to less than 20% of the
| |
| | costs 100,000,000 USD. The Authority
|
| GDP.But obtaining this goal means that
| |
| | receives 60,000,000 from the government
|
| Governments will have to reduce their
| |
| | and sells 40,000,000 USD worth of bonds
|
| involvement in the economy and cut back
| |
| | to the public via the stock
|
| on services and on the public sector.This
| |
| | exchanges.Once the facility is built, it
|
| is not a very clever idea for economies
| |
| | begins to supply water to the residents
|
| in transition.The public sector in
| |
| | and to businesses. They pay for the water
|
| economies in transition could and should
| |
| | that they consume - and the income from
|
| be privatized only after three conditions
| |
| | the sale of the water goes to the
|
| have been met:First, the establishment of
| |
| | bondholders. This income covers both the
|
| a strong private sector. Individuals and
| |
| | interest payable on the bond (=its
|
| firms in the private sectors are the
| |
| | coupon) and the money that the
|
| consumers of electricity, water and phone
| |
| | bondholders invested in the bonds
|
| services. Without a strong customer base,
| |
| | themselves and which they have to
|
| it would be very difficult to sell the
| |
| | recover.* Lately, a new fashion is
|
| PTT, the electricity company or the water
| |
| | developing in public administration,
|
| companies to any private investor in
| |
| | called devolution.It is the transfer of
|
| reasonable prices. The public sector must
| |
| | parts of the national budget directly to
|
| become profitable to be sold to the
| |
| | the local authorities or granting them
|
| private sector (=to be privatized). A
| |
| | the right to regulate their own fiscal
|
| losing company is not worth anything to
| |
| | (=tax) systems.Devolution is a prime
|
| an investor, unless he thinks that he can
| |
| | example of a mega-trend in human
|
| turn it around and make it profitable.
| |
| | societies: that of the dismantling of Big
|
| The best way to do this is to increase
| |
| | Government. But this is subject for yet
|
| its sales to a loyal and sizeable group
| |
| | another article.
|
| of clients.The second condition: the
| |
| |
|
