Following a February 9 meeting with her Hungarian counterpart, Mihály Varga, at which she was regaled with the success of the Hungarian tax police, Finance Minister Brigita Schmögnerová called for the creation of a similar body in Slovakia.
The call brought immediate criticism from other ministries, Slovakia's financial police, and analysts, who said tax cops were unnecessary and would be an added financial burden on the state.
"We are against it and believe that investigations into particular cases of tax fraud and evasion and subsequent law enforcement should be carried out by a [current] unit working under the Interior Ministry," said Economy Ministry spokesman Peter Benčúrik, adding that the cost of launching the new body was another reason for his ministry's opposition.
"In our opinion, the improvement of cooperation between the existing financial police and tax offices could be a more effective way of fighting tax evasion," he said.
The impact of economic crime on the corporate sector in Slovakia has been seen repreatedly over the last few years, experts say, while government officials admitted earlier this year that it would take at least one generation for the corporate sector to recover from what they described as a "deeply-rooted illness".
Hence the need for tax police, according to Schmögnerová, who would work under the auspices of the Central Tax Directorate and would be key in reining in tax evasion and fraud in Slovakia, as well as a bulwark in the general fight against economic crime.
"The body needs to be launched in order to augment the powers of the tax office to investigate criminal tax offences and intensify the fight against tax evasion," Schmögnerová said at a press conference on February 12.
The Finance Ministry has been lobbying for creation of the tax police since last year, but having heard the Hungarian finance minister speak about the Budapest body's apparent success, Schmögnerová feels she now has an even stronger case for her proposals.
"The total cost of establishing the Hungarian office was 2.8 billion Hungarian forints ($9.5 million). This body, which was established in 1998, has returned these costs 30 to 40 times over through its operations," Schmögnerová said.
But according to Hungarian analysts, the performance of the Hungarian Tax Police is not quite as bright a picture as Schmögnerová painted. Peter Karli, an analyst with the Budapest branch of brokerage firm Wood & Co., said there has been more attention given to the politics behind the institution than any results it had achieved.
"There has been a lot of political fighting around the tax police and frequent changes at its top post, but the media hasn't written much about its results," he said, adding that it was hard to define what role the tax police had played in revealing particular cases of corruption.
"I don't know what kind of difference it makes when these cases are investigated by Tax Police [rather than] the financial police," Karli concluded.
Officials with the Slovak financial police, who currently investigate tax crimes, said that the difference was actually very little, and that there was no need for a similar body to be launched in Slovakia. Dušan Bitner, deputy director of the Slovak financial police, said that their calculations showed that if the same amount of money were to be invested into a Slovak tax police as was in the Hungarian body, it would not be returned for five years.
"One also has to bear in mind that it takes about three years to educate people who would be hired to do this job. So such an institution would be costly and redundant ," Bitner said, adding that time and resources should be put into improving the performance of existing tax offices rather than creating a new tax body.
"In our opinion, tax offices in Slovakia don't take advantage of all measures that the current law allows them to use [in order to eliminate tax evasion]," Bitner said
The wrong end of the stick
According to Finance Ministry spokesman Jozef Mach, however, if investigations into particular cases of tax evasion were performed by a new tax police working under the Central Tax Directorate, the results of such investigations would be seen earlier than at present.
"The financial police have had intensive cooperation with regional tax offices, and we believe that they conclude current investigations slowly, not because they are inexperienced, but because they have to ask regional tax offices for materials on cases. This slows down the whole process," Mach said.
For corporate sector analysts, though, the ambitions of the Finance Ministry are proof that the issue of tax evasion has been dealt with wrongly. Karol Balog, director of the Agency for Industrial Development and Revitalisation (AIDR), said that the new institution would be doing the same thing as existing ones, but just under another name.
"It's like that story about a student asking his teacher whether he should learn English from a Cambridge textbook or an Oxford textbook. The teacher answers: "learn it from any textbook you want, but make sure that you learn it three times per week". In other words, it doesn't matter who deals with, but how they deal with it," Balog said.
19. Feb 2001 at 0:00 | Peter Barecz