Parliament decided on November 9 to delay passing of a constitutional amendment with its second reading, which, if approved, will make a referendum binding in case the government decides to increases taxes, except of excise tax.
The draft was passed with second reading only partially on November 9 and it was decided to postpone adoption of that part of the draft, which deals specifically with the referendum requirement issue.
The decision was made after lawmakers from the Christian-Democratic Movement (CDM), the main party in the parliamentary minority, which opposes the proposal, offered an alternative option.
Vice-speaker of the Parliament Levan Vepkhvadze of CDM offered to linked tax increases with non-confidence vote to the government. The referendum requirement proposal, if approved, will go into force together with the newly passed major constitutional amendments after the October, 2013 presidential elections.
According to CDM proposal if government's proposal on tax increase under the new constitutional system fails the Parliament's backing it should become a reason for non-confidence vote, which, the CDM believes, will make government more reluctant towards the idea of proposing tax increases.
Pavle Kublashvili, a ruling party lawmaker who chairs parliamentary committee on legal affairs, said although he was against of CDM's proposal to link tax increases with non-confidence vote, in overall he agreed with the idea to discuss various options and to postpone voting on this part of the draft.
The proposal, which was first put forth last year, has seen long been shelved already. It was passed with the first reading by the Parliament in December, 2009, but saw no further progress since then. The discussion of the draft resumed last week.
In July, 2010 International Monetary Fund (IMF) welcomed the Georgian government’s decision to postpone the implementation of the referendum requirement on tax increases, saying that the postponement “will help maintain the necessary policy flexibility until the fiscal deficit has returned to more prudent levels.”