American debate for the Macedonian budget

Robert Nesimi

“Prime-Minister Zaev, accompanied by Finance Minister Tevdovski, again spent most of the day lobbying MPs in Parliament to get the necessary votes for his government’s budget-proposal for fiscal year 2018. For the third day in a row Zaev is trying to convince MPs from his own ranks to approve the Budget without further delays. By our count Zaev already has 48 “Yes” votes; 38 from his own coalition and 10 from DUI, which supports the proposed budget unconditionally. To secure the remaining votes Zaev continued talks with all parliamentary groups, addressing their specific requests. The main restriction remains the Government’s commitment to keep the deficit below 3% of GDP, otherwise more than a few votes would switch from a “Yes” to a “No”.

The easiest path to a majority remain the seven MPs from the Alliance and Besa which are approaching these negotiations as a bloc. Our sources say that there is substantial progress after a meeting which lasted a few hours, when the government agreed to immediately start financing works on the highway Skopje-Blace. Still, a key point of contention is Alliance-Besa’s demand that the percentage of VAT intended for local government be raised to 5%, which would entail a large restructuring of the budget, a red line for Zaev this late in the process. However, we have learned that Alliance-Besa may agree to postpone this decision for next year, on the condition that financing for the Polog regional recycling center begins this year.

Financing for the Polog recycling center might actually be welcome for the Prime Minister, since that is also one of the key demands of two MPs from the green party DOM. The Prime Minister is open to meet their second demand, i.e. more money to address the pollution crisis, especially in the Skopje and Bitola regions. In this scenario the government may already count on 57 votes for the budget.

Striking a deal with Alliance-Besa and DOM, would leave the Prime Minister just four votes shy of a majority. However it is now almost certain that he won’t get them from the four holdouts from the “Color Revolution”, who continue to oppose increases in military spending, a step that is necessary to meet NATO standards. Having in mind that NATO membership in 2018 is something that the government wants at all costs, it is more than certain that there is no room for compromise and the Prime Minister cannot count on these four MPs.

That leaves the last group of seven MPs from the so-called Agriculture Caucus, who we understand are having the toughest and longest negotiations. As self-proclaimed champions of farmers, this group strongly opposes the decision to start taxing individual farmers at current income tax rates in 2018. The group also wants higher subsidies for farmers, spending that would be offset by cuts in the state administration. Naturally, these demands are strongly opposed by the more numerous Skopje MPs that Zaev needs more than any other group in order to secure a majority. It seems likely that an eventual agreement might take the form of a compromise between delaying income taxes on farmers on one hand and reducing subsidies on the other. However, our sources say that the two groups are still far from reaching an agreement.

As a last resort, if Zaev keeps falling short of a majority for the budget, he doesn’t exclude the possibility of talks with individual MPs from VMRO. But this type of cooperation seems very unlikely, having in mind VMRO’s insistence to keep the flat tax as their crown legislative achievement and Zaev’s determination to replace it with progressive taxation. In an extreme situation a solution might be a trade-off, whereby VMRO supports the budget and the new progressive taxes are offset by cuts in other taxes, such as VAT. Still it is more likely that Zaev secures the necessary votes from his own ranks, with no support from the opposition.
The only certain thing so far is that all 120 MPs have unanimously agreed to cut funds from the State Electoral Commission, specifically from salaries of its members.”
In a nutshell this is how economic news would look like in a normal country in December. In American terms, this is more or less how the tax debate is playing out in the United States. On one hand it is certain that even in the US such a reform will pass along partisan lines, with opposition democrat congressmen and senators voting against. On the other hand it is undisputable that there were a lot of talks and negotiations within republican ranks, with only a certain number of republicans endorsing the reform from the start. The rest had their own unique positions and demands, and president Trump, together with republican leaders in Congress, had to spend countless hours negotiating a compromise bill that would have the support of a majority. However good or bad that reform is, it cannot be denied that all branches of government acted as they should, with a special accent on the supremacy of the legislative branch – Congress, which is by Constitution exclusively empowered to raise taxes and spend funds anyhow.

Of course such a debate remains in the realm of science fiction for us in Macedonia. The government and opposition changed hands, but the process of budgeting continues as before, with the Prime Minister and Finance Minister playing Kings. Instead of being the backbone of the whole process as prescribed by Constitution and laws; instead of giving directions to the government on how to plan, where to focus, what can and what shall not pass, Parliament continues to act as a mere pawn in government’s hands; a mute executor of government’s wishes and orders. A situation that confirms that the conditions for the continued tyranny of Government over Parliament, and by extension state and society, are still alive and well.

And that’s why, to this day, we will not have a normal debate, but will be content that the whole budget process will not end with blockades and kicking MPs from the Parliament; that the current government still hasn’t reached for the reins of dictatorship, which are at hand any time it might need them. That is what we still call progress!