Publication: Eurasia Daily Monitor Volume: 2 Issue: 32

On February 10, entrepreneurs staged a one-day strike in various cities across Belarus to protest the introduction of a value-added tax (VAT). The authorities reacted by detaining strike leader Anatol Shumchanka, head of the public organization “Perspektiva,” for a 10-day period. However, the businessmen have threatened a strike of indefinite length if a compromise is not reached by February 20.

Most Belarusian entrepreneurs bring their goods from Russia and sell them in local markets. In the past prices have remained free from state control. However, since January 1, markets, fairs, and sales outlets in Belarus have been subjected to price rises of around 18% on top of the previous flat tax. Those involved in small business are also subject to a plethora of rules that have rendered their situation financially untenable. These include a declaration regarding payment of VAT, documents certifying transport delivery from Russia, and verification by the Russian taxation authorities of the accounts of the Russian suppliers. Belarusian entrepreneurs demanded that a commission be formed to investigate these problems and that it should begin its work no later than February 10 (Narodnaya volya, February 1).

Shumchanka, in a February 1 interview in Narodnaya volya, argued that the state has no reason to place such heavy pressure on businessmen. In 2003, taxes from this sector of society contributeed 23% of the state budget, as compared to 8-9% from state industries. The problem is that few people wish to purchase low-quality goods from the state sector. In the past entrepreneurs have successfully sold cheaper and better quality goods from Russia; thus providing a needed outlet for the public.

General Valery Fralou, a leader of the former parliamentary faction “Respublika,” has offered his own analysis of the predicament. He pointed out that in the period of perestroika, many people lost their jobs and were obliged to start their own business. Those with close links to the authorities could operate larger concerns. When President Alexander Lukashenka came to power in 1994, he promised to stamp out corruption. During this campaign he began to put pressure on new entrepreneurs by imposing rules, inspections, and licenses. To these has now been added the VAT. It has led entrepreneurs “to the boiling point.” In 2003, the association Perspektiva was created to address these issues. However, the public has understood that the president’s promise “to shake hands with the last entrepreneur in 2005” is something to be taken seriously (Narodnaya volya, February 8).

Even prior to the agreed strike date, entrepreneurs in Pinsk took action. In a meeting that began at 9 am, the traders heard an address from Syarhey Kastyukovich, head of the Pinsk Union of Entrepreneurs, who lamented the state’s attempt to destroy small businesses. Meanwhile, the market administration threatened that those who did not open their stalls that day would lose their sites, but evidently the traders did not react to this threat (Narodnaya volya, February 2). On February 9, in a preemptive action, militiamen arrived at the offices of Perspektiva and arrested Shumchanka on the grounds that he had been involved in a traffic accident. Subsequently, however, he was sentenced to 10 days imprisonment for distributing the Kommersant newspaper, which contained information about the proposed strike (Narodnaya volya, February 11; Charter 97, February 10).

The one-day strike on February 10 proved remarkably well coordinated. In both Minsk and Homel, about 5,000 traders took part. Several demonstrators in Minsk were wearing orange scarves reminiscent of the recent protests in Ukraine. In Vitebsk, over 1,000 traders blocked regional administration buildings for the entire day, despite being threatened with submachine guns. In Hrodna, close to the Polish border, the mass of protesters burst through a militia cordon and milled around the city council offices, shouting “No to the VAT!” Hrodna mayor Alexander Antonenka addressed the protesters, but was warned that the traders would refuse to work in March if no action were taken. According to one report, over 4,000 protestors gathered in a park in the center of Hrodna (Narodnaya volya, Gazeta wyborcza, February 11).

Responding to the situation, Uladzimir Polyan, first deputy minister of taxes and duties, declared that the strike had not been sanctioned by the authorities. Entrepreneurs should have dealt with this situation earlier, in his view. To the question of whether the taxes were justified, he replied, “I am a state official and fulfill my duties according to the laws of the country. I think these laws are correct” (Narodnaya volya, February 12).

The private traders have supplied scarce goods or products of high quality that have effectively alleviated any form of consumer crisis in Belarus reminiscent of the Soviet period. For the government, the private trader needs to be subjected to greater state control. However, the reaction has been strong. When traders from 25 cities met in Hrodna on January 16, they discussed issues that went beyond the VAT, embracing apartment rents, alcoholism, problems related to Chernobyl, and travel of children abroad. Because their livelihoods are threatened, they are not cowed by the usual official show of force and threats, and they are prepared to take an interest in other social problems.