Georgian Politician Promises "Fight to Change the Tax Code"

Georgia's contentious party politics have triggered such intense concern that former United States Secretary of State James Baker visited the country in July to advise President Eduard Shevardnadze on how to limit fraud the November 2 parliamentary elections. But Georgia's economy is also in dire shape, and consensus about how to quickly improve it is harder to reach.

Gogi Topadze, a beverage magnate who leads the Industry Will Save Georgia party, says he wants to stimulate growth by simplifying the tax code. He spoke to EurasiaNet about his platform, the upcoming elections, and his willingness to work with the Shevardnadze government.

EurasiaNet: Dissatisfaction with the tax code has characterized the Industrialists. In your opinion, what is wrong with it?
Topadze: It's not possible to point at one or two paragraphs in the tax code that we're not happy with. The whole code is detrimental to the Georgian economy. It is oriented towards the import of goods and kills possibilities in Georgia to start businesses that could successfully compete with Western products.

The tax code, which reflects recommendations from the International Monetary Fund, World Bank and [others], doesn't allow for the opportunity to modernize the industry and agriculture of the country. We have proposed to parliament three different variants of the tax code that would stimulate Georgian business. Their main principles were liberalization, the use of more understandable language in the code and a simplification of taxes. Instead of the current 80 different taxes there would be only four, three of which would be national and one local.

With such a simplified code, you could fight corruption. The current code is so cumbersome and opaque that it is easy for bureaucrats in the tax department to take what they want if they are inclined to do so. Therefore, the [Ministry of Tax and Finance] doesn't want to [simplify] the law. Big companies have a whole group of lawyers to fight back. But small businesses don't.

EurasiaNet: And yet parliament didn't approve of your proposal for a simplified tax code?
Topadze: After a first reading [in March] there came a visit from the International Monetary Fund [from June 24 to July 7] and they forbade the government to approve the draft proposal. The international financial institutions have their own strategy, which they don't want to change although it doesn't take into account Georgia's peculiarities, so they blocked our proposal. [For background, see the Eurasia Insight archives].

EurasiaNet: If a new tax code were accepted would you consider joining the pro-government parties and President Shevardnadze?
Topadze: Yes, because why did businessmen go into politics? The most important reason was to reinvigorate Georgian business. As long as we're in politics we will fight to change the tax code. If this happens we could cooperate.

EurasiaNet: There is another pro-business party in Georgia: the New Rights. What is the difference between this party and the Industrialists?
Topadze: There's not much difference. But the New Rights came into parliament as part of the government's Citizens Union of Georgia (CUG) party. But suddenly this party fell apart; there are already four or five parties in parliament that came from the CUG. [For background, see the Eurasia Insight archive]. The Industrialists have always been an opposition party. And we will remain so until the government takes on an economic strategy that will protect the interests of Georgia – a strategy, in other words, that will go against the wishes of the international financial institutions. We need an economic strategy that takes into consideration the particularities of Georgia's situation. And when the government starts doing this, we will cooperate with them