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Economic Freedom Act

By Messenger Staff
Thursday, December 24
The Georgian Parliament is preparing to make yet more amendments to the Constitution. This time they concern the Economic Freedom Act which President Saakashvili announced would be drawn up on October 6. This initiative triggered hot debates, but now everything should be clarified and each aspect of the initiative given a precise form of words.

The idea that the business environment will be liberalized has naturally increased interest in this move. Some analysts suggest that in fact some of the new regulations suggested already exist but are not being observed. More sceptical ones regard the initiative as the usual PR stunt, suggesting that business liberalisation is designed to counterbalance the Tagliavini Commission's conclusions. Some analysts had expressed doubt that this initiative would be implemented, but it is on the agenda now, and unlikely to be either delayed or significantly amended by the National Movement-dominated legislature.

Some aspects of this reform remain rather controversial. For instance, the President initially said that tax increases should only be imposed if a countrywide referendum approves them. No one on earth would happily vote for an increase of taxation, but certain adjustments have now been proposed. The draft amendments now state that a referendum will be held before property tax is raised,not excise taxes, which are mostly levied on luxury items. The new amendments also envisage that any change made after such a referendum will take four years to come into force, as businessmen will use this period to draw up a long term business plan and investment programme. The whole issue of excise taxes has aroused the interest of businessmen, with the Business Association asking for further regulation of the taxation process to prevent the Government raising excise taxes to fill a budget deficit. Businessmen also want more guarantees that their rights will be upheld.

The process of adopting these amendments has just begun and the Economic Freedom Act will need to be studied in great detail, over a long period of time, before it takes a credible form. This is an absolute necessity, and the process should involve a wide range of Parliamentarians, experts, analysts, scholars and businessmen, regardless of their political orientation. The sort of changes proposed by this Act are not matters for one Government alone and they are not short term measures. We will all be affected by them, so should all have the opportunity to influence such a fundamental decision.