ANALYSIS
This suggests that the unpredictability of regulations is due to the influence of unknown
insiders on lawmakers.
Leaky Bucket Policies...
continued from page 11
The unpredictability of laws coupled with negative perceptions of the
government’s lack of timely information sharing about new laws is a significant
factor that unintentionally fuels the hidden economy. Frequent and drastic changes do allow businesses enough time to adapt and finally fully comply with
new laws, despite their willingness to do so. The source of the problem with legal
predictability is not at the implementation level, but rather deeply rooted at the
formulation/adoption level of policy making and indicates serious State capture.
Unfair competition is identified by businesses as the major business environment problem, especially for micro companies (Figure 1).
Inconsistent treatment of goods by different Customs authorities is another significant factor that unintentionally fuels the hidden economy.
This happens when imported goods are hidden or inaccurately declared in order
to reduce duties or VAT paid to Macedonian Customs. Imports from Greece,
Germany and Bulgaria account for a significant part of the hidden imports into
Macedonia – about one-third (1/3) of imports from Greece and one-quarter (1/4)
from Germany are hidden from Customs (see Figure 3).2 In the case of Greece
and Macedonia, it is not known how much of these hidden imports are the fault
of each side, due to lack of cooperation. CRPM/CSD’s recommendations in this
regard include implementing rotations in Customs (officer rotations, shift rotations, randomized, computer-generated check schedules) to prevent the formation of corrupt relationships between officers and companies/truck drivers; introducing random checks by mobile units and the use of randomly-generated routes.
In conclusion, while the Government has hindered the hidden economy in Macedonia with tax reforms and form [^