It’s hard to keep up, but one gaffe Zoran Zaev made in his recent appearances caused a significant stir in the otherwise desensitized public. Speaking with TV24 earlier this week, Zaev said that it is a common practice in Macedonia to have employers pay their employees “cash on hand”, confusing even the pro-Government journalist who was doing the interview.
– Here, we all know, part of the salary is paid in an envelope.
– But there are inspectors, there is the revenue service, the financial police…, the journalist Mladen Cadikovski protested.
– Yes there are, but when the inspection comes the employer says it’s my money, I paid income tax, I paid dividend tax and I have right to pay my employees.
– That’s against the law.
– What is?
– What you said the businessmen told you they were doing.
– It absolutely is not, Zaev insisted.
Macedonia has low income tax but hefty retirement and healthcare taxes that eat away at the salary. Employers often try to under-report the actual salary, pay these so-called benefit taxes on a lower gross sum, and then pay an agreed remainder “cash on hand”. Under the previous VMRO-DPMNE led Government, efforts were made to reduce the benefit taxes but to increase their collection with stricter inspections. For the current Prime Minister to publicly endorse this practice of withholding taxes is unheard of.
Zaev’s family runs a number of manufacturing, food processing and construction companies which typically pay below the average wage. After his interview, many have wondered if Zaev is talking about his common practice of withholding taxes.
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