Tax Amnesty Proves Damp Squib

Kazakstan’s parliament has had to extend the deadline of an amnesty for undeclared assets because the results to date have been so unimpressive. NBCentralAsia commentators warn that simply prolonging the amnesty period will have little effect, because the reason why people are not taking up the offer is that they distrust the authorities.



On October 26, the lower house of parliament amended the law that offers an amnesty for declaring untaxed assets so as to bring them into the legal economy, extending the deadline from December 31 to April 1 next year. The explanation given was that more time was needed since take-up had been low, and the bureaucratic procedures involved were somewhat convoluted.



The campaign has raised about two million US dollars in taxes since it was launched on July 5, a fraction of the 30 million dollars it had been hoped would come in by year end. There have been 7,500 applications to legalise assets worth an estimated 9.5 million dollars, while the justice ministry reckons there are about 1.5 million pieces of real estate alone in the grey economy.



Eduard Poletayev, a political commentator, argues that the amnesty law comes too soon for Kazakstan, and has proved ineffective because people with undeclared property are apprehensive about the move. “The main reason is that people are afraid to disclose their true assets, and no legislation is really going to encourage them to do so,” he said. “Kazakstan is a rather special case, in that being the de facto owner of something in no way means one has the right to own it. So coming at this time, the law is premature.”



Political scientist Dosym Satpaev says amending the law to prolong its effect will not really address the principal problem, which is not about legislation but the way it is implemented by local authorities.



“It is not just that people don’t want to make their property legal, but also that the procedure for doing so is poorly thought-out. In other words, local government has effectively sunk this project,” he said.



Another reason that NBCentralAsia’s experts offer for the lack of success is that it is not long since the last such amnesty was offered, in 2001, so people may be thinking that there will be more opportunities to rejoin the legal economy in the future. Having too many amnesties may devalue their significance, as people cease seeing them as a unique opportunity.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)