Urban Businesses Hit by Dubious Taxes

The long-established practice of getting public- and private-sector enterprises to pay for urban improvement is being exploited by corrupt municipal government officials. <br />

Urban Businesses Hit by Dubious Taxes

The long-established practice of getting public- and private-sector enterprises to pay for urban improvement is being exploited by corrupt municipal government officials. <br />

Monday, 18 December, 2006
Local government is entitled to save money by requiring businesses to cover the cost of improvement schemes including planting trees, asphalting roads and sprucing up streets and pedestrian ways.



But the preparations made for the 15th anniversary of Turkmen independence, marked on 27-28 October, revealed that some officials are not above enriching themselves in the process.



In the eastern city of Turkmenabat, for instance, the heads of state enterprises and owners of private firms were forced to buy advertising billboards at the artificially high price of 7.5 million manats a time (300 US dollars at the commercial exchange rate).



According to a representative of Avtotrans, the advertising agency which produces the billboards, they are actually priced at between 2.5 and 3.5 million manats, or 100 to 140 US dollars. He confirmed that they had made 200 billboards for the city government, and said he failed to understand why it was selling them at almost double that sum.



Analysts say the difference, totalling 600 million manats or 25,000 dollars, will probably be pocketed by city officials.



Municipal government has become so accustomed to extracting funds from state enterprises and private business that the practice was legalised several years ago by President Saparmurat Niazov, who issued a decree authorising what is called the “internal tax”. Since then, all enterprises, both public and private, must contribute 5,000 manats or one dollar from each monthly salary that they pay to urban improvement.



Enterprise owners say that as a result, the city’s boat-building and excavator plants are putting up park railings, while fountains are installed by the local cement factory.



However, there are few state enterprises with healthy finances, and it is difficult to get them to pay more than a set amount. The burden of illegal fees and charges therefore falls on the private sector. The owner of a hairdressing salon in Ashgabat, which has just two employees, recalled bitterly that in addition to the “internal tax”, he had to pay out money to pave the footpath outside the shop, plant some greenery, and put up an advertising billboard.



The bus stops in Ashgabat are changed each year, and again it is private firms that have to pay the costs of designing and installing them, The old ones are taken away and put up in provincial towns.



Ahead of the recent independence celebrations, the city authorities required even the smallest businesses, such as mini-bakeries, cosmetic salons and video rental shops, to buy the expensive billboards. In addition, shop owner Akhmet Bazarov said he had to pay more than three million manats to put the billboard up and another 10 million on refurbishing the surrounding area.



Bazarov complained that he does not have this kind of money, as his shop earnings have to cover his wholesale purchases, employee wages and taxes.



The owner of a small shop renting out video and audio cassettes and CDs said he too had no spare cash for billboards, planting trees or laying asphalt, as he brings in just 700 to 1,200 manats (30-50 dollars) a month, out of which he has to take a wage and pay for electricity.



Another businessman, Batyr Khalyev, grew tired of the demands made by the city government and started recording every payment he made. Instead of paying cash, he paid through a bank account so that there was documentary evidence of the transaction, and wrote down the illegal fees in a notebook.



This material, which would make damning evidence if it was shown to the Ministry of National Security, has discouraged officials from the mayor’s office, who now rarely turn up at Khalyev’s business to ask for money, whereas they used to visit twice a month.

Support our journalists