The World Bank and the International Finance Corporation have published one of the most profound business environment studies in the world, "Doing Business in 2006: Creating Jobs." The report gives ratings of business climate regulations and reform in 155 countries. Belarus ranks as low as 106th.

The lower a country's rating the worse its government's performance. A lower rating means that the government poses a lot of obstacles to producing value added and creating more jobs.

It is really a weak consolation that Ukraine has an even worse business climate, as it ranks 124th. The worst CIS performer is Uzbekistan as Number 138. The list closes mostly with African states stricken by AIDS and inter-tribal wars. And it has to be admitted that the present Belarusian leadership keeps its country not far from the status of a banana republic. Or to be more exact, the ruling Belarusian authorities are pushing the country to that status increasingly closer.

Unfortunately, the main news for Belarus in this report can be ranked among economic or fiscal tragedies. Economists get a convincing confirmation of the fact that the Ministry of Finance and the Ministry of Taxes and Duties are the most anti-business and reactionary government agencies. If they take all the 11 categories that the report's authors divided business climate into, they can see that Belarus ranks last, 155th in the world, in one of key parameters, and namely, paying of taxes. Belarus is now a country with the heaviest tax burden in the world. Belarusian entrepreneurs must make 113 payments, spend 1,188 hours, and pay 121.8 percent of gross profit in taxes.

So, if a company or an entrepreneur earns $100 in gross profit, the state wants them to pay almost $122 into public budget. The tragic absurdity of this situation is clear to all, except of officials in the above-mentioned ministries. However, the Presidential Administration and the Council of Ministers are not particularly willing to conduct any tax reform, either. They make promises from year to year to lessen tax burden and simplify taxation system. But taxes only grow higher. It is virtually impossible to find a single person in the country who would dare to say that he or she knows all in the sophisticated tax legislation.

As for the number of tax payments, Belarus is together with Uzbekistan in the end of the 155-strong list of countries. Entrepreneurs are forced to bow down to tax authorities so that they could feel who the real master in the country is. As mentioned above, businesses have to spend 1,188 hours to fulfill all their tax obligations, or nearly 50 days. This figure is higher only in Cameroon, Ukraine and Brazil.

Just imagine that almost two months every year entrepreneurs have to "invest" into relations with tax authorities. In addition, there are also sanitary authorities, customs officials, local governments, state auditors, etc. When are they supposed to work?

The World Bank's report dispels the Belarusian authorities' myth that the country has a modern tax and budget policy, just like in Sweden or Denmark. But in reality the Swedish government's taxes on business profits are more than two times smaller in comparison with Belarus. A Swedish company makes only five tax payments and spends 122 hours a year, or ten times less than in Belarus.

This and other parameters allow Sweden to rank 14th in the world in terms of business climate quality. Denmark is even 8th. What Belarus is doing is copying an African model of chronic poverty and calling it Scandinavian.

The report's authors say that under the existing tax system in Belarus, businesses have two options: either closing down operations or evading taxes. Apart from making 113 tax payments and spending 1,188 hours on that, it takes two years to get tax refunds.

The Belarusian ministries of finance and of taxes and duties disregard modern approaches to funding government spending. According to one study, a 10-percent decrease in indirect taxes, like VAT, could lead to a 7-percent rise in investments. A study in India shows that a tax reform can boost productivity by 60 percent. Dozens of countries prove in their experience that lower tax rates and simpler tax payment procedures increase tax revenues. If the Belarusian government really wanted to create a favorable business climate in the country, it would take 39 business climate parameters from the World Bank for guidance rather than stick to its own 16 (largely senseless) economic performance indicators. The World Bank's approaches could become a much finer indicator of business climate quality.