PROMOTING ECONOMIC GROWTH: THE RIGHT TAX POLICY FOR ALBANIA

Abstract

Since 2010, as a clear outcome of the financial and economic crisis throughout Europe and the world, the total tax revenues in Albania have been falling steadily. For the first couple of years, government choose to borrow to maintain and stimulate the economy to keep growing, albeit very slowly. But, starting in 2013, since the level of public debt reached almost 65 percent of the Gross Domestic Product, changing taxation policy was the better way out. Taxes were increased, but without the intended results: revenues did not increase and economy did not grow. This paper, while examining the situation of the economy of Albania, intends to discover whether it is consumption or investments that is hampering recovery and growth. The paper will also show what were the outcomes of the taxation polices adopted and whether the tax increase hit the consumers or investors. Referring to data collected from secondary sources and to theoretical approaches on taxation and growth stimulation, this research intends to add some recommendations as to the better taxation policy to be chosen to ease the way out of this crisis.