Risky Undertaking

From the point of view of the prehistoric, elementary principle of justice – it is almost impossible to criticise the draft of the Law on Lump Sum Tax on extra income and extra property, amassed thanks to special advantages, which was submitted to the Serbian Parliament by the Government of Serbia in order to settle financial accounts with former Milosevic associates. The draft of this law is primarily based on the position that no society can tolerate theft or fraud on the part of the state, that no democratic government is allowed to overlook such things even if they were conducted ‘in the name of the national interest’, and that any hitherto misbehaviour of the kind must be penalised by the book. It is well known that the Milosevic regime in Serbia used to enable pilfering on the part of the state authorities – and that was done according to the law. Are we, out of economic reasons and reasons of legal security, going to allow those who have amassed fortune during Milosevic’s reign to mock us? Is it possible to ‘settle accounts’ with the Milosevic caste by means of the Law on Lump Sum Tax and, at the same time, avoid the degeneration of the civil stability we yearn for so much? Perhaps these are the toughest questions put forward today when the project of this routine law on ‘financial reprisal’ towards a motley crew of war profiteers, politically suitable businessmen and criminals, and jovial careerists and impostors, who have increased their wealth enormously under the symbol of struggle ‘for maintaining the socialist order, the Federal Republic of Yugoslavia and the united Serbia’. What kind of ‘legal way of increasing capital’ in the last twelve years in Serbia are we talking about? Excluding the fact that in 1993 we had that amazing hyperinflation, the annual money supply growth rate amounted to 900%, while the discount rate of the National Bank of Yugoslavia was always really negative. In short, the question is whether at least one of the ‘legally approved and legally paid back’ credits of the National Bank appeared as anything else but a fraud on the part of suitable users of such credits. Can we, in any way, speak about some legal businesses on the foreign exchange market in a country where there was not a single month in the course of which the official foreign exchange rate was even comparable to the real exchange rate? Someone might say – people drove cars, had central heating at home, ate, drank, consumed medications, etc. thanks to those credits. But, not the whole population had a chance to buy petrol at official prices, or purchase medications by means of state-approved gratis prescriptions, and so on. In any case, in all those surreal ‘legal transactions’, only the commission was always real, and it was regularly collected by Milosevic’s children, courtiers and poltroons.

Even if we leave the morality and socio-philosophical matters aside, we are obliged to resolve the following question: are we supposed to expropriate the greatest part of fortune amassed under Milosevic’s state tutelage – to see what kind of risky consequences we can expect in the legal, economic and political fields. A full legal analysis of this project would be premature, since not many have seen the draft of that law. However, as Vladan Batic, the Serbian Minister of Justice, said – that the possible taxpayers of this lump sum duty will be even those, whose ‘guilt and responsibility cannot be legally substantiated’ – it is evident that this legal project does not stand on secure ground and that it will definitely have to be endorsed by the constitutional courts. The only thing that bears some certainty within itself is that lawyers will have a chance to augment their wealth, since I do not believe that the option of self-registration and self-conclusion of ‘tax deals’, at a discount of 35% (sometimes even higher), with the authorities will become commonplace among the medium-sized businesses, although I did hear that about fifty medium-sized firms have already applied for paying the ‘ransom’.

From the economic point of view, the mentioned draft already produces side effects, and if it becomes adopted, it will have an unpleasant symbolical meaning and it will create innumerable negative consequences. It is hard to speak about some new capital flight, since, during Milosevic’s reign, of the ‘major capitalists’ had already hidden an enormous amount of money abroad. Yet, the legal project we are talking about has probably postponed once more the repatriation of that capital – ‘until DOS (the Democratic Opposition of Serbia) cools down’. Some claim that we do not need investors with ‘dirty money’ – but those who currently have no jobs probably think otherwise. The effect of this law on the budget is likely to be negative in the long run, since what you snatch today, you will lose tomorrow. The expropriating of the rich endangers the oncoming process of privatisation, which would have to be a key process in the transition, and which cannot be initiated only by the trustworthy minority.

The political aspect of reprisal will not be easily accepted by the rich – although, at first glance, it seems to be quite approved by common people and it is likely to compensate for the murkiness that has naturally spread after the adoption of the new tax system in the Parliament of Serbia. The first question is whether DOS leaders are willing to ‘sacrifice’ all domestic magnates, or just those who have been close to Milosevic’s family and regime. Furthermore, it will be interesting to see the stance of the legalists grouped around President Vojislav Kostunica, who will have to make a choice between popularity and potential key donation (maybe that is the true reason why Djindjic insisted on the adoption of this law). The question is whether the newly announced ‘expropriation of expropriators’ will be well received by the Serbian diaspora. What is most important – will the poor, when they ‘smell’ the revolutionary ‘justice’, easily confront with the inevitable burden of the property-based economy?