Economic Policy Review ISSN 1313 - 0544

Ministry of Interior – a Fairytale with No End

Author: Kaloyan Staykov / 08.12.2011
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When a few weeks ago the Institute for Market Economics (IME) suggested that the Ministry of Interior (MoI) shall increase its internal revenue, we meant that it should be done by means of better management and asset sales and not by expanding the scope of the fees it collects. It seems that while the rest of us are looking for measures to improve the business environment, the MoI is looking for a way to make it worse.  

Amendments to the Private Security Act were promulgated in the State Gazette by force of which the scope of activities to be licensed under this Act was expanded to “self protection of traders or legal entities` property”[1]. This decision is absolutely ungrounded and the arguments supporting it are even less grounded. According to the authors of the motion for the amendment – MoI and the Ministry of Economy, Energy and Tourism, such a license is needed because private security companies are at a disadvantage because they have to pay for licenses, explains the Dnevnik daily. This is just as valid a reason as making companies pay for patents when their employees type/copy or make coffee, because private companies, dealing with such activities owe patent tax for them.

The MoI expects that additional BGN 2 to 9 mil. will be collected as a result of this measure, depending on how many companies decide to preserve their self protection activity and how many companies will give it up or turn to private security companies. This amount is suspiciously close to the amount of donations that MoI receives. According to data from this institution for the first two quarters of the year BGN 4,8 mil.[2] were collected and if the same pace is maintained until the end of the year it can be expected that the amount for the whole year could exceed BGN 9 mil. Although it might sound a little conspiratorial, it cannot be excluded that after the donations scandal and the curbing of donations from private companies, MoI could be looking for a substitute of the donations it received until recently.

On the other hand, this is hardly necessary taking into consideration the fact that donations from 100% municipal and state owned companies are still allowed and they are definitely not mean when it comes to such charity. A good example is the company Bezkontaktni Multipleksorni Verigi (Contactless Multiplexer Chains) which is owned entirely by MoI and it is the biggest donator to the Ministry. Only earlier this year the company donated 236 vehicles[3] to the Ministry. Such donation schemes traditionally go hand in hand with unaccounted for expending of state funds and non transparent selection of suppliers of goods for the Ministry. I am saying state funds because in compliance with the legislation state limited liability companies are obliged to pay in 80% of their profit to the budget of the institution and thus they reduce their profit and do not pay in anything. On the other hand, nobody knows in what way the donated goods have been purchased – form which supplier, at what price, under what conditions and respectively it is not known whether this has been the best possible purchase or there is yet more to be expected.

Let us, however, go back to the absurd as to the existence of a license for security activities. In practice MoI does not provide quality service – maintaining internal order and security, which necessitates the establishment of private companies that are to provide a better service. And it is here that the MoI intervenes by asking private companies to pay for its own lack of action. It is equivalent to you paying a repairman to redecorate your kitchen and then the repairman does a lousy job. After that you do your own repairs better than the repairman and then he comes back for you to pay him because by presumption that is his job.

After all, companies will almost certainly find a way to evade the need for such a license on self protection. One simple example would include them hiring somebody at the position of an office manager who instead of dealing with folders and documents is going to deal with security issues. Irrespective of how smart or just the government thinks it is, the imagination of the taxpayers shall outsmart it.

 


[1] http://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=57066

[2] http://www.mvr.bg/NR/rdonlyres/2E17C42A-FCCD-49FE-90A7-82319C400D83/0/DareniaMVR.pdf

[3] http://www.segabg.com/online/new/articlenew.asp?issueid=10158§ionid=2&id=0000401