Georgian Tax Minister Resigns Over Budget Spat

by Tatiana Smolenska, Tax-News.com, Moscow

16 August 2001

Georgian Tax Revenue Minister Mikheil Machavariani resigned on Wednesday during a cabinet meeting on the budget, saying that it was impossible to achieve results predicated in the budget bill laid before the meeting. The Minister asked President Edouard Shevardnadze to relieve him of his post, and when the President refused, he quit.

Machavariani said the budget proposals would cause a rerun of 1999, when an "unrealistic budget" was not carried out. Machavariani's protest followed a suggestion by Minister of Economics, Industry and Trade Ivane Chkhartishvili who proposed a 100m increase in the budget's revenue side to 1.2bn lari.

In post-Communist countries it is usually the case that the Economics Ministry (often created out of the former 'Gosplan' or state planning agency) enjoys putting forward unachievable plans while the Finance and Tax Ministries have to cope with gritty reality.

Agriculture Minister Davit Kirvalidze, who is thought to be closely aligned with Machavariani, told journalists that Machavariani's announcement was not unexpected for him as the situation in the executive leadership was 'rather tense'. Finance Minister Zurab Noghaideli, who is also among Machavariani's supporters, refrained from commenting on this issue.

Interior Minister Kakha Targamadze described Machavariani's decision as emotional. The president's special economic adviser for economic reforms, Temur Basilia, told journalists that without the president's consent, Machavariani had no right to resign.

Machavariani said: "In 2001, we have managed to increase tax revenue by 86m lari," but insisted his decision to resign was final. In refusing to accept Machavariani's resignation, the President praised the Tax Revenue Ministry's performance. However, he added that there were reserves in the treasury which could be mobilised to square the budget sums.

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