EurasiaNet Recaps - Georgian Politician Promises "Fight to Change the Tax Code"

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GEORGIAN POLITICIAN PROMISES "FIGHT TO CHANGE THE TAX CODE"
Daan van der Schriek 7/25/03
A Q&A with Gogi Topadze

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�.

EurasiaNet: The Industrialists are also unhappy with James Baker’s proposal for the composition of the Central Electoral Commission. What is your objection?
Topadze: Actually, we made [a similar] proposal to parliament four months ago. However, in some of our proposals we suggested giving a bit less representation to the government coalition.

Our position is that the three parties � Citizens’ Union, Revival and Industry Will Save Georgia � who passed the seven-percent barrier in the last elections should get more representatives than the others, who would get one each. But in Georgia there are more than 100 parties; you can’t let them all into the commission. The problem is that the Citizens’ Union has fallen apart. All of the parties that sprung from it want their own representatives� Also, we always have been an opposition party. But if these old government parties get their own representatives and then decide to unite again with the government coalition, then they would have an absolute majority� [For background, see the Eurasia Insight archives].

EurasiaNet: Do you believe the elections will be free and fair?
Topadze: I doubt very much whether we can hold elections on the level of the civilized Western countries. It is known how the latest elections were held, which were condemned by the international community. But still, there has been progress and I think the coming ones will be more democratic than the previous.

EurasiaNet: Guram Sharadze [a radical nationalist known for his campaign against religious minorities] is a member of the Industrialists’ parliamentary faction. Does this mean that you approve of his ideas? [For background, see the Eurasia Insight archives].
Topadze: Sharadze is not a member of the Industrialists’ party. We entered parliament in the last elections as an election bloc and he has his own party. Some of Sharadze’s ideas appeal to me, but not all. And the next elections we will contest on our own so Sharadze will also have to go alone.

Editor�s Note: Daan van der Schriek is a freelance journalist based in Baku.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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