Entrepreneur: Lukashenka’s ‘Model’ Is Inventing More Taxes Out Of Thin Air

The authorities in the country are afraid of competition from the side of smart people.

Businessman from Maladechna Andrei Markau has told this in an interview with Charter97.org news website, commenting on the situation of the country.

- Lukashenka once said he would shake hands with the last entrepreneur in the country. What (or who) stands in the way of the Belarusian business the most?

- The biggest problem for Belarusian entrepreneurs is the whole system created for small and medium-sized businesses in the country. And this problem is complex.

There are a number of problems that make entrepreneurship here a rather complicated and risky business. Starting individual entrepreneurship is not difficult, it takes a couple of working days. However, doing business itself carries the risk that tomorrow you simply won't have anything left.

And this is equally true in both cases: if you are an unscrupulous entrepreneur and have poor documentation, they will squeeze everything out of you and leave you with nothing. The same thing will happen if you conduct your business too well: someone at the top will look at you and say: this business must be taken away in favor of the state.

It repeatedly happened with us. As an example, I can give the story of the plant near Dziarzhynsk for the extraction and processing of crushed stone. An entrepreneur, a private investor, organized his own production and everything went fine, but at one point, the officials came and said: 50%, you transfer the controlling share in your enterprise to the state.

This applies to medium-sized businesses. If we talk about the small ones, then, in addition to some private ties, unfair competition harms them the most. For example, someone has a friend in the tax office, and he complains to him that another individual has crossed his path. As a result, a check is quite easily organized, during which - without fail - they will find some flaws, inconsistencies and violations. Because it is impossible to carry out everything thoroughly with our current legislation.

And always, even if the violation is insignificant and does no harm to anyone - penalties will be applied against an individual entrepreneur. And the case will most likely be sent to court, which, of course, will uphold the charge.

This applies to all small businesses: one day, a check may come - and you will have nothing.

The second important issue: lending to small businesses. The interest is incredibly high. There is no possibility of deferred payment. That is, the financing of business in our country is not developed, and getting subsidies from the state is incredibly difficult and requires a huge amount of documents.

As a result, people who have a very cool startup, a unique idea, come across this impenetrable wall and simply disrupt the project. Thus, the initiative is suppressed - this has been happening all the past 25 years. The state policy is aimed at suppressing private initiative and drive as such.

- Why do Lukashenka and his “tsar people” hate the active, passionate class so much?

- Most likely, this comes from the sphere where he grew up, developed and made his way up the career ladder. This is, in general, a communist and socialist environment where private initiative was not supported in any way.

This is inherent in Lukashenka’s ideological model itself: collective farms are in the first place, where everyone is equal and the same. Private initiative in this system is suppressed in the beginning: so that individuals do not rise above others.

Secondly, there is still the possibility that Lukashenka is afraid of competition with smart, good, initiative people who could reach great heights in the development of their business and gain influence.

However, in general it’s hard to say how things really are. It is difficult to say what controls this person (Lukashenka - edit.)

- Is it true that they can close down or bankrupt any entrepreneur, disagreeable with the authorities?

- Yes, absolutely.

- There is a saying, every french soldier carries a marshal's baton in his knapsack. In the whole world, the business people strive for the top, but in Belarus, the stories of success often end in jail. Why does it happen this way?

- Most likely, this follows from education, the environment from which our leading “elite” emerged. Again: because of their fear of any competition and the model of economy that they adhere to.

This is a socialist model with a lack of free market relations. This is strongly signaled by the fact that the share of unprofitable enterprises in Belarus is incredibly high. In a free economy, new enterprises appear to replace the unprofitable ones. The newcomers are capable of giving people salaries and not asking for money from the budget.

No wonder Belarus under Lukashenka was nicknamed the “reserve of socialism”: trying to achieve good economic performance in this system is incredibly difficult.

- Another “reserve of socialism” comes to my mind: Venezuela under Chavez and Maduro. The outcome there is sad. How do you assess the outcomes of Lukashenka’s rule in Belarus?

- Results can be assessed in comparison. After the collapse of the USSR, we had a lot of freedoms and opportunities. But if you compare it even with the Russian Federation, where everything is far from smooth, doing business in Belarus looks even more complicated.

Despite the fact that we are formally at the 63rd place in the world in terms of ease of doing business, however, the amount of documentation, inspections, the procedure for punishing violations, the lack of opportunities for growth and development make us in reality lag behind our neighbors.

Therefore, the outcome of Lukashenka’s reign is disappointing. It was possible to achieve much more during this time. If we take our neighbor Poland as an example, we can see how much more the country has achieved over the same period of time - due to the fact that at one time they decided to switch to the capitalist model and did it successfully.

- How easier it is to start and promote own business in the neighbouring countries - Poland and Lithuania?

- I have not studied in detail the conditions for doing business in these countries, but I can say one thing: the laws are real there, they can be implemented.

And they are transparent: you can quite easily approach an official and find out what needs to be done. And he or she will write it down point by point: you do (one-two-three) what is necessary - and you succeed. And any check can do nothing to you.

In our country, this system has a closed character. There are many nuances that the tax specialist when he comes to his office simply will not mention, considering it insignificant. But when the check comes, and this is inevitable, you will be punished.

- Besides, about non-transparency: one of the Belarusian entrepreneurs told about the trick used by the authorities to raise the rent by 20 times. It is simple: they equal the grass or the tiles at the site to the capital development, and sharply increase the rent. Does the rent system really provide such wide opportunities to “strangle” entrepreneurs?

- There is an incredible amount of methods for this. They can issue “additional agreements” to the rent. They can cancel the reduction coefficients and introduce increasing ones. And to equate paving slabs with capital buildings is also quite a real tool.

Probably, officials do not have the task as such - to strangle small businesses. They have the task of making money, because they simply do not have enough in the budget. And it’s not enough, because such a “model” of economy has been built.

Therefore, officials are simply trying to make money. And what will happen to the business - they do not care. “Business is business - they will earn more for themselves,” they say something like this.

The key problem is that the attitude towards entrepreneurship in our country is disrespectful: let it work under any conditions, and we will milk it. And then methods and means enter the arena: how to “squeeze out” more money.

And in general, this applies not only to entrepreneurship - this is, in principle, the paradigm of our state headed by Lukashenka: a tax on this, a tax on that, a little money was collected there, a little there, a little covered up a financial hole in the budget - and everything seems to be wonderful. They introduced a tax on “parasitism”, something else - and everything is fine.

The authorities are trying to earn as they can.

- Besides, it has been reported recently that they increased the tariffs for water in commercial premises for legal entities and individual entrepreneurs by 78 times! Is this also a “method”?

- The fact is that legal entities pay the full price for housing services. And there are no concessions from the state.

As you know, at the moment the authorities are trying to get loans from the IMF. And for this they are trying in every possible way to manipulate utility bills. If they could not immediately raise them to 100% for the population, then for legal entities - be my guest. At the same time, no one takes into account that many enterprises have crazy debts to the housing and utility services, and they will continue to bury themselves in debt.

It’s all about the same thing: about the state’s attitude to entrepreneurship and a lack of understanding that small and medium-sized businesses in developed economies account for a rather large percentage of the GDP.

Therefore, I am not surprised by the sharp increase in communal tariffs for individual entrepreneurs - this is a logical result of the policy of our state.

- In 2015, the authorities introduced and started taking the “tax on debts”. Individual entrepreneurs have to turn to loans, credits, including from physical persons, for the development of their businesses. How would you comment on this tax?

- It is difficult to comment on this kind of taxation: there are no words - only emotions. I can’t say anything decent about this ...

Apparently, this is another closure of some holes in the budget. For all these years, the authorities have developed their own model of “earnings”. The key earnings of the state comes from the periodic adoption of strange laws that do not have any rational basis.

The ruling elite was never able to build a healthy economy. In attempts to preserve the Soviet legacy, they forgot about the normal model of state earnings at the expense of the real sector of the economy.

Instead, Lukashenka and his entourage are constantly trying to grab some piece, introduce some new taxes that they come up with from thin air to stay on their feet somehow. All this “model” now rests strictly on foreign loans, which became an injection of money into some bottomless pit. Money is lost to no one knows where: the “modernization” of factories that later did not work, the European Games, for which funds were raised from ordinary workers, cutting down bonuses for them.

In Maladechna, for example, there was such a case. There was no money in the budget, but it was necessary to install an MRI device in the city clinic. So, in order to buy it, they cut off all the bonuses for medical workers - completely.

And this shows that, from an economic point of view, the state is carrying out an unsound policy.

- Why have you decided to participate in the electoral campaign this fall? What are your goals, what do you want to achieve?

- The key goal is to convey information to the people. Because many points just never surface.

Everyone knows, for example, what is happening at their enterprise, in their street. But few know what is going on in general. And there is a huge set of problems - even at the level of our Maladechna.

I have been living in this town all my life, communicating by the form of my activity with a large number of people - and just disastrous things have come to the surface.

There is simply no strength to endure this. Structural changes are needed. And I am aware: if I don’t do anything, if I don’t make an effort to change, if we can’t use even the smallest chance, nobody will do it for us. And the country will continue to fly exactly in the same abyss where it is now rapidly rolling.

If you like this article, you can support the website Charter97.org

MULTI-CURRENCY ACCOUNT FOR ASSISTANCE:

Bank's name: Bank Millennium S.A.
Address: ul. Stanislawa Zaryna, 2A, 02-593, Warszawa
IBAN: PL 97 1160 2202 0000 0002 1671 1123
SWIFT: BIGBPLPW
Name of the account holder: Fundacja “KARTA ‘97”
Purpose/title of payment: Donation for statuary aims

You can contact us by the e-mail [email protected]