Given enough rope, regulators will hang us all

Green Space Café is a tiny business on the outskirts of Tbilisi, next to the Ford Service Centre in Dighomi. It is far less prominent than TBC Bank, and, therefore, few in the Georgian media, diplomatic community or business associations took notice of the fact that this small café has come under a vicious attack by a couple of Georgian regulators, V. Labadze and E. Gogoladze.

The two are not mob hitmen – such as Vincent Vega and Jules Winnfield from Tarantino’s Pulp Fiction. They are righteous inspectors employed by the Georgian Revenue Service. Having descended on Green Space Café on September 4, 2018, the duo was armed not with live ammo, but administrative violation protocols (blanki in Georgian). And, instead of reciting Ezekiel 25:17, they referenced the fine print of Georgia’s brand new Law on Tobacco Control.

Article 5(2)l of the new law, which became effective merely three days earlier, on September 1, 2018, prohibited “the sale and/or display of tobacco products… in shop windows, in glass cases, on counters, and on shelves or displayed otherwise in a manner that it is visible from outside the shop.”

Yet, here they were, a few rows of cigarette packages neatly arranged on the shelves behind the Green Space Café salesperson’s back – visible from outside the shop!

Labadze and Gogoladze utterly lacked a sense of Hollywood drama. Their ‘vengeance and furious anger’ took the prosaic form of a 2,000 lari fine. Boring, but very painful for Levan Abzianidze and Nino Kvelesiani, the enterprising couple behind Green Space Café.

Levan and Nino were not the only victims of revenue service ‘vigilantes’ in early September 2018. According to data provided by a single tobacco distributor, JTI, a total of 34 contracted outlets – small and large – were fined for violating EU-style outdoor visibility rules. An additional three fines were imposed on retailers for failing to fully comply with advertising restrictions.

Anton’s story

Anton’s career as a professional stylist was interrupted in 2001 by a nasty car accident. Only 22 at the time, Anton was back on his feet after a year of rehabilitation, yet he could no longer work as a stylist. Having taught himself microelectronics, Anton was able to make a living by repairing phones and laptops. A few years later he landed a BP warehouse manager’s job in Bakuriani and Marneuli, and even made a temporary attempt to go back to his beloved profession in Donetsk. Taxi driving, the last resort for so many Georgian men of his generation, has been Anton’s main occupation since 2015.

In September 2018, Anton sold his old Mercedes and decided to buy a relatively new and much more efficient Toyota Prius. In fact, he did not buy his Prius (its price tag, 6,000 US dollars, was well beyond his means) but leased it at 800 Georgian lari a month, for 18 months. Burdened with debts (a mortgage and car lease) and elderly parents, Anton and his newlywed wife Maria (they married on January 19, 2019) can barely make ends meet.

Early on February 20, Anton woke up not to the sound of music but an SMS signal on his phone. A ‘smart’ camera caught him driving his Prius without a technical inspection certificate, resulting in a fine of 200 lari – roughly 20 per cent of Anton’s monthly income.

Having not read the fine print of Georgia’s new law on periodical technical inspections, Anton was planning to have his Toyota inspected by September 2019, according to the schedule for privately owned vehicles. His mistake was to think that he owns his car. In fact, it was registered in the name of Geo Leasing Company LLC and, as such, had to be inspected by January 1, 2019. That turned out to be a costly mistake.

Too much rope

Georgian workers, so we are told, will soon be better protected from occupational hazards. As reported by OCMedia, the Georgian parliament recently “adopted a new law on occupational safety granting inspectors new powers to inspect all workplaces in the country without a court order or prior warning.” The new organic law will also strengthen the Labour Safety Agency, giving it greater autonomy and increasing its budget. From September 1, 2019, the agency will have the authority to examine working conditions of any entity in all sectors of the economy, and issue fines up to 100,000 Georgian lari (40,000 US dollars).

To me, this sounds like a lot of rope!

Georgia’s European future

I am not a smoker, and am very happy that Georgia is introducing measures to raise the price of cigarettes, restrict access to tobacco products, and ban their advertising. Likewise, I am very happy to see Georgia gradually introducing technical vehicle inspections as a means of improving road safety and (potentially) reducing traffic congestion. And, I definitely have nothing against stronger labour safety standards in Georgia’s horrifically unsafe workplaces.

I do, however, have a serious issue with the unnecessary brutality and stupidity in the implementation of all the above EU-style regulations.

There is nothing particularly European about revenue service inspectors slapping fines on small Georgian businesses that fail to comply with a new advertising or display regulation two days after its coming into effect. Fines should be the last resort, not a knee jerk reaction to a first violation. Businesses should be taught how to comply with a complex regulation. They should be warned. They should be given a bit of time to adjust.

There is nothing particularly European about drivers being fined for failing to understand the complex timetables for technical vehicle inspections. The same ‘smart’ cameras that are currently programmed to issue 200 lari fines can be reprogrammed to issue warnings and reminders. An SMS sent to a driver’s phone could politely notify her of any new requirements, giving her some time to set a bit of money aside and comply.

There is every reason to suspect that, unless better trained and properly instructed, Georgian labour inspectors will wreak havoc on Georgia’s small and medium businesses. Most Georgian employers do not have the capacity to comply – fully and immediately – with the fine print of the new labour safety standards. Workers’ safety is important, but businesses will have to be given some time to learn the new standards and adjust their processes and equipment. Labour inspectors should be instructed to help in the process of a costly and time-consuming adjustment. Not to pull their guns and administrative violation protocols, but help.

Understandably, Georgia is working very hard to harmonise its legislation and fulfil its obligations under the Association Agreement with the European Union. Regretfully, however, in the rush to tick off the boxes on this agreement, mindless bureaucrats tend to forget that government institutions are there to serve the people. Their purpose is not to inflict fines and sanctions, but to improve people’s lives. Fines and sanctions are a legitimate means to achieving the common good. But, they should be a last resort, not an automatic routine.

The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy. 

About the author

Eric Livny

Eric Livny

Eric Livny is founder and president at Tbilinomics Policy Advisors, and chair of the Economic Policy Committee at the International Chamber of Commerce (ICC Georgia).

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