Selective execution of the laws


Nikola Popovski

One of the eternal issues in politics is how do the authorities enforce laws they do not like? Unfortunately, in the case of Macedonia, it seems that the most common answer is – selectively.

The first case is the Law on Value Added Tax (VAT) in the taxation of natural persons as taxpayers, and the second one is the Law on Smoking Protection (or as it is actually called) in the part of the premises where it is forbidden to smoke. The first law the government wants to apply consistently, although it seems that yesterday it did not agree with some of its provisions, that is, the amount of personal income that citizens earn annually as the basis for initiating the mechanism of their conversion into taxpayers for VAT. The second law the authorities do not want to implement consistently, although they are obliged to do so despite their apparent disagreement with the law.
Let’s go through them one by one. Let’s start from the second – the law on smoking protection. With the advent of the new government, it said it wanted to partially liberalize the ban on smoking in public spaces, although in fact it is not some sort of liberalization but a high expression of conservatism. Unfortunately, in the Parliament, the Law on Amendments to the Current Law was submitted – one of the few occurrences that the previous catastrophic power left us in a useful legacy. Namely, for several months now in Macedonia, it is obvious that the government has the tendency to behave as the law has already been replaced, and public smoking areas have increased. It’s clear to us every day, for instance, that in restaurants, cafes, bars and related facilities, they are huge spaces with closed walls on all six sides of the space where you can continuously smoke.
Practically, smoking indoors is contrary to the law, and no one punishes or sanctions it. This is called selective law enforcement and is not a good practice. The selectivity is extended to the extent that the spaces that are temporarily enclosed by glass or plastic in a number of objects are several times larger than those that are building part of the objects and are converted into real smokers where there is no breathing air, but a mist of nicotine smoke which burns directly from the cigarettes or is previously recycled through the lungs of smokers. The latter, like all other addicts of such occurrences, are blabbering that if they do not like it, then they should not sit there. The logic is perverse to the end, but it is sad that the government accepts and tolerates it.

A few days ago I had the opportunity to see in Ohrid also a fairly perverse appearance where all summer terraces of the buildings are thoroughly closed from all the outside sides with glass and guests smoke in there, and the internal building, where it is supposedly nonsmoking, is with wide open movable doors and windows to the outer area where people smoke, so in fact they smoke everywhere. In fact, the new government allowed smokers to make non-smokers passively, yet abundantly smoke if they decide to go to a public catering facility. Similar effects are everywhere in Macedonia, and even in many places the smoking ban is not even respected in the internal parts of the facilities. I think that the government should seriously consider what it does, even if 2/3 of the population consume nicotine! The remaining 1/3 is entitled to a healthy life guaranteed by the state.
Let us now return to the disturbed public on the occasion of the decision of the authorities to consistently implement the VAT Law that changed in 2016. That law refers to the fact that natural persons that have an annual personal income out of regular employment, and it is higher than 1 million denars, should register in the PRO and pay VAT. Previously, the amount of revenue was set at the limit of over 2 million denars. This problem is not at all simple and easy to solve. First, before the elections, the government promised to return the limit of 2 million denars. The eighth month passes, and the law is neither passed nor proposed. Secondly, the obligation to pay VAT objectively should exist, but the following elements should be carefully studied. First, the persons who earn income in the form of salaries within the legal entities (trade companies, associations, organizations, etc.), the income on which they pay personal income tax have previously been paid VAT in accordance with the law. Automatically, if the income is not from an employment relationship, the obligation to tax the newly issued value is avoided. Secondly, legal entities and individuals performing similar or identical activities on the market must be treated equally. If a person is renting a living space or a field, providing intellectual services or temporarily doing something else as a natural person, he/she receives a reimbursement for which only personal income tax (PIT) is paid, but if the same is done by a legal entity, it must also invoice the VAT. Thirdly, if there should be income that is relatively low and which is not previously taxed with VAT, at what level should the non-taxation limit be set so that the costs of administering the state are not equal to or greater than the amount of the tax paid? Fourth, would it be okay, as in some other tax systems, if a natural person is engaged and with an additional activity, the same need to register for that purpose some type of trade company and carry out its business activities in that way? Fifth, which business activities would be exempt from this obligation and why would it be done? Sixth, would it be okay for persons who are not employed to pay personal income, legal persons from the gross amount of the fee to calculate and pay not only PIT, but also VAT? There are many questions and dilemmas. Perhaps I’m not right about everything, but there must be a serious, professional and independent debate that a law should survive or change and be in the spirit of the times.
The government, pressed between its pre-election promise and the need to enforce the law that it may not like, but is inforced, has dilemmas. Although I am not consulted, I would suggest that the government resolve the case in the following manner. First, immediately submit a law to the Parliament of Macedonia in an urgent procedure that will return the limit of 2 million denars under which natural persons would not be obliged to register as taxpayers of VAT. The law stipulates that it will enter into force immediately, and will be applied retroactively from January 1, 2018. It is permitted by Art. 52, paragraph 4 of the Constitution of the Republic of Macedonia, which states that: “Laws and other regulations cannot have a retroactive effect, except as an exception, in cases when it is more favorable for the citizens.” That is, retroactive non-payment of tax according to the law is “more favorable” for the citizens. Once that is done, the government, peacefully and without rush, to open a series of debates and research how to solve this problem, even if it is resolved more severely than now, but to achieve a high degree of consistency and assurance that the right thing is done and that every income should be fairly and equally taxable to all participants in the economic life.
Now let’s go back to the beginning. Why does the government have double standards and behaves selectively in enforcing these two laws? The answer is necessarily needed.