Context
Institutional weakness and citizens’ mistrust towards the state are key challenges along the road to achieving a functioning democratic order in Kosovo. The raising and use of state resources must be transparent and responsible if the state is to be seen as effective, fair and development-focused. Parliament has a central role to play in this regard. However, parliamentary control of government activities is often no more than superficial. In addition, recommendations from the Office of the Auditor General and the Audit Committee have little impact on the preparation of subsequent budgets. Budgetary planning is currently an unsatisfactory basis for meeting demands for accountability from parliament and the general public.
The tight fiscal framework is further restricted by newly embedded fiscal rules. It is the task of the Ministry of Finance to develop and implement effective strategies to combat the sizeable informal sector. The tax administration must systematically improve efficiency if, at the very least, it is to offset the medium-term decline in revenues from border duties and fees as a consequence of regional integration by levying taxes.
Objective
The parliamentary committees charged with monitoring public finances fulfil their mandate. They pay due consideration to relevant aspects of public finance, demand accountability based on complete and reliable data, and in so doing ensure effective parliamentary budget control. The tax administration is equipped to conduct company audits on a professional basis. It ensures taxpayers are treated with equality and transparency.
Approach
The project advises the Budget and Finance Committee on its role in the budget cycle and on strengthening budget transparency. It also promotes the Committee’s ability to conduct regulatory impact assessments. In order to improve the work of the Committee, the project supports the development of internal rules of procedure and a reporting system and helps strengthen the Committee Secretariat. The newly established cooperation with the Audit Committee will include providing advice on clarifying its mandate, introducing a more efficient mode of operation and improving networking in the sector. Another focus is on formalising the exchange of information between parliament, the Ministry of Finance and independent institutions.
The project supports the tax administration by providing methodological training for tax inspectors, introducing inspection software, creating an office to handle fines and criminal cases and expanding the range of information available to taxpayers. Since April 2013 the tax administration has also been receiving advice from an expert on international taxation agreements.
Results
The Budget and Finance Committee of the parliament of the Republic of Kosovo is increasingly fulfilling its tasks and responsibilities. This is evident from the detailed consultations on draft legislation and the use of parliamentary instruments. In the most recent budget discussions, the Committee was able to take many more budget organisations into consideration and examine them in much greater detail. The Committee’s regulatory impact assessments have been improved, and the exchange of information with independent institutions and the Ministry of Finance is now more formalised. Gender-sensitive planning and preparation of the 2015 budget was successfully demonstrated at central and local level.
There has been a marked improvement in the effectiveness of the audits carried out by the Kosovar tax administration since 2011. This is evident both in the increase in inspection revenues achieved from taxes, fines and interest between 2011 and 2013 and in the rise in average revenues from individual inspections. A separate office has been set up to handle fines and criminal cases, which officials have been successfully trialling since April 2014.