Issue 5, 2013. October-November



Everyone demands something from the state budget: pensioners — increased pensions, public-sector employees — higher salaries, the needy — adequate social assistance, everyone else — free healthcare, education, etc. Not many realize that there is no such thing as a "free lunch." As a matter of fact, that "someone" is every single citizen of the country. Post-Soviet/post-Socialist societies, like Georgia's, find it difficult to comprehend who a taxpayer actually is. In Georgia, much like elsewhere, a taxpayer is not only a hired individual or an employer, but rather any consumer in the economy, and therefore virtually every citizen.

To put it simply, society has little or no understanding of the "price" it pays for running the state. A layperson does not understand the true financial load that he or she bears individually for receiving public services. To remedy this, an innovative web portal designed by the Economic Policy Research Center (EPRC) will give answers to a wide range of questions regarding public finances. The website user can gain awareness of the size of the state budget; its annual collectables (tax revenues as well as other inflows); priorities of budgetary expenditures; state debt of the country; personal contributions in providing healthcare, education and other programs; personal contributions for paying salaries to government officials; how much one works for oneself and how much for the state. Moreover, the website presents budgetary expenditures from a per-capita and per-employed-individual perspective, thus helping visitors to better understand the real "state burden" for each citizen and each working individual.

As of 2013, state budget expenditures exceed 8 billion GEL. According to the "bill" for government services presented below, this figure translates into a 2,134 GEL "burden" per capita annually. Given the low number of individuals who are employed as "hired" (approximately 662,000, roughly 14% of the entire population), and not taking into account the self-employed, the "burden" is as high as 13,203 GEL per year. The most "expensive" of such "burdens" is transfers to the local budgets - 285 GEL per capita; next come pension provisions and road infrastructure with 231 GEL per capita. The "cheapest" services are financing the public broadcaster - only 6 GEL per year, and providing aid to internally displaced persons - 9 GEL per year. The "bill" explains to citizens how much the state "overspends," which results in a budgetary deficit. As of 2013, 82% of the budgetary expenditures are planned to be financed through tax and non-tax revenues, while the remaining 18% will be financed through borrowing, privatization receipts and other inflows. In 2013 the state debt will increase by 193 GEL per capita to reach 2,136 GEL per capita by the end of the year.

This "cash register receipt" represents an easy-to-use tool for distributing and explaining this information to ordinary people, that is, where their taxes end up and what amount they contribute for public services. The "bill" presents state-provided services and their per-capita cost. At the same time it provides information on deficit spending per capita as well as growing public debt. Due to the calculation method — per capita — it is clear that the data only illustrate the existing costs of services; on the other hand, this method allows everyone to calculate how much the per-capita tax burden would grow, if, for example, pensions should rise by 10%.

The web portal further presents a number of simulation "games" to its users. For example, a virtual shop, "Buy Your Own State," helps to illustrate everything that the state does today and how much money it costs taxpayers; at the same time, by entering this imaginary shop one will be able to choose which services he or she really wants from his or her personal state and those for which he or she would not pay even a single tetri. The price of the "personal" state will then be calculated based on the choices made and the user will discover how much cheaper or more expensive his or her state would be.

The site's calculator, entitled "What Do You Pay," will help to count how much a person pays for state-provided services. After entering information on monthly gross income, monthly expenditures in total (while breaking these down further as per monthly rent/mortgage, spending on fuel, smoking and drinking habits), the calculator will show the person's own monthly balance, and even how much in an eight-hour working day that person works for him- or herself and how much for the state.

Conducting such research and making it available and accessible for the public in an understandable manner will help citizens realize their personal financial role in the state, which will raise civil awareness. Individuals will have an easy reference to understand the sources of budgetary expenditures, to assess the necessity of particular budgetary expenses proposed by the state, and to analyze the economic effects that an increase in budgetary expenses has on their pockets. Thus, the aim of the project is to empower citizens with knowledge and information needed to engage actively and meaningfully in critically important budgetary processes at every stage — formation, allocation, implementation and monitoring. The capacity to understand the budgetary processes and priorities of the government is a necessary step toward the greater objective of developing a politically engaged citizenry and a more accountable government.

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