Illegality as state instrument for the social protection of population – analysis by Info-Prim Neo

Two weeks ago, the Chisinau media received a press release from the Ministry of Internal Affairs informing about the raids carried out by the police at about 250 economic agents suspected of “illegal rises in the price of bread”. The communiqué notified of the tough sanctions imposed in the form of fines and sequestration of goods, as well as of the reduction in the respective prices as a result of the police’s actions (See: http://www.info-prim.md/?a=10&nD=2007/08/15&ay=9849 The police said they had to intervene because the respective economic entities did not observe the commercial margin on bread set by a Government Decision. Though appreciating the care of the state and recognizing its rights and obligations in the area of social protection of the population, some experts point to the illegal character of the actions the police took in the given case. They think that the true aim of the corresponding actions was to shift the exclusive responsibilities of the authorities onto the economic agents and this shows that the campaign has a populist character and the international community has witnessed that Moldova cannot guarantee the economic freedoms. [Experts produce evidence] The commercial margin is set by the Moldovan Government’s Decision No.547 of 04.08.95 regarding the measures that the state must take to coordinate and regulate the prices (tariffs). This normative document is an instrument for regulating not only the prices of bread and bakery products, but also of other food and noon-food products such as vegetal sun-flower oil, butter, kefir, sugar, detergents, soap, building materials, medicines etc. Such state practices for regulating prices exist not only in Moldova, for certain goods and services these being even necessary. But any price regulation should be well justified, and this was not done in this case [according to analyst Igor Gutan]. Point 3 of the Decision 547/1995 says that the commercial margin on bread and bakery products is 10%. The analyst considers that the implementation of this Decision runs counter to the official declarations regarding the free market nature of the Moldovan economy as well as to the Constitution. By the Decision No.29 of 25.05.99, the Constitutional Court declared point 5 of the Decision examined by the Government, which said that the normative profitability level on the sale of oil products is 30%, as unconstitutional. The Court blamed the Government for fixing a normative document with law power by depriving the Parliament of its responsibility, violating thus the principle of separation and cooperation of powers in the state stipulated by article 6 of the Constitution. The Court also made reference to article 10, paragraph (2) of the law on domestic trade No.749-XIII of 23 February 1996, which says that the entities carrying out commercial activities purchase and sell commodities, execute works and provide services at prices and tariffs set in accordance with the law. In such conditions, a commercial margin can be fixed only by law. Igor Gutan says that the stipulations of point 3 of the Government Decision are not different in meaning from the stipulations of point 5, which was declared unconstitutional. According to him, the stipulations of this Decision run counter to the stipulations of article 6 of the law on entrepreneurship and enterprises, which says that the economic entities have the right to fix, independently, the prices and tariffs of the products made (works carried out and services provided) by them under the signed contracts. Gutan also says that another aspect that challenges the legality of the given Decision is the clause regarding its issuing, which makes reference to the stipulations of article 13 of the Law on the Government of the Republic of Moldova. Under the stipulations of article 102 of the Moldovan Constitution, the Government makes decisions to organize the implementation of the laws. There is no law named the Law on the Government of the Republic of Moldova nowadays and was none in 1995. Its name was modified by the Law No.1091-XII of 23.07.92. From another viewpoint, since it was made until present, the Decision 547 has been nothing else but a means of implementing the state policy in the social sphere using the entrepreneurs. Normally, if the Government wants to give concessions to certain categories of people, it can do this, but using the public money that it administers exclusively. The entrepreneurial activity is defined as an activity that must bring profit to the ones that carry it out. The Government, by definition, should create all the necessary conditions for the development of this activity. But the Decision 547, which fixes the commercial margin at 10%, makes the obtaining of any profit impossible, because, as far as it is known, the commercial margin is used to cover all the expenses, including the costs of transportation, purchase and sale of goods. [Who are the controllers?] Igor Gutan considers the checks on the prices of bread and of bakery products conducted by the police as illegal, even if the policemen seemed to be guiding by the stipulations of article 13, single paragraph, point 42 of the law on police. But, according to article 102, paragraph (4) of the Constitution of the Republic of Moldova, the Government Decisions are countersigned by the ministers, who are obliged to implement them. The Decision 547 was countersigned by the Minister of Economy and by the Minister of Finance. Therefore, Minister of Economy and Trade Igor Dodon and Minister of Finance Mihai Pop are the ones that must implement the Decision, not the Minister of Internal Affairs Gheorghe Papuc. That means that the entrepreneurs can be checked only by representatives of the first two ministries and their divisions. According to the analyst, while the police carried out checks, it violated also the stipulations of the Law No. 235-XVI of 20.07.2006 regarding the basic principles of regulating entrepreneurial activity, which clearly stipulates, including in article 16, that the checks can be conducted only in the cases fixed by the law, while the control of the entrepreneurial activity, except the fiscal and financial controls, has a consultative character. Resulting from the abovementioned conclusions, the analysts recommend the Government to abrogate the Decision 547. If the law enables to modify the prices in compliance with the principles of market economy, the punishment of the entrepreneurs for the “illegal rises in the price of bread” is also a flagrant illegality. In addition, the recent actions by the police confirm again that the state should loosen control over the entrepreneurial activity, including by eliminating the practices of illegal controls and by reducing the number of controls in general. Otherwise, the people will not be surprised when such studies as the Cost of Business Regulation will show an increase in the number of controls, while the effect of the measures designed to improve Moldova’s image in front of the investors will be minimum in the best case, if not the opposite. The Government must, first of all, create the necessary conditions for developing the entrepreneurship and protecting it, while the free initiative and competition will solve the problem of price levels inclusively, consider the experts quoted by Info-Prim Neo.