Footsteps of the Postneft era - penalty economy

In the post-oil era, the scarcity of funds has brought forward unpredictable income sources (such as lottery proceeds, fines, and penalties) rather than fixed income sources, to boost fiscal capacity. Accordingly, the Milli Majlis (National Assembly) has introduced amendments to the Code of Administrative Offenses. For context, the last adjustment to fines took place in July 2023. This suggests an annual review of fines for potential increases.

The Azerbaijani Parliament has set such high fines for violations that it’s almost unbelievable. Let’s look at the new fine limits: for littering from a vehicle, fines range from 200 to 4000 manats; for dumping household waste in undesignated areas, from 300 to 5000 manats; and for throwing any object or waste out of a vehicle, from 200 to 4000 manats. In addition, the fine for littering tobacco products in the environment has been raised from 50 to 300 manats. For those who commit the same offense twice within a year, the fine will be 700 manats or 60 to 100 hours of community service.

These extraordinarily high fines understandably raise many questions: Are these fines intended to reduce violations to a minimum? How do these fines compare to the average monthly wage in the country? Are they aimed at reducing violations or simply increasing budget revenue?

Fines – A Polished Way to Empty Citizens' Pockets

Before the war, funds were mostly directed toward infrastructure development, with various fine-based “discoveries” in place – from variations in tire sizes to any imaginable detail becoming grounds for a fine. Now, however, various measures have been launched, both legal and otherwise, to generate funds for infrastructure in liberated territories. It’s as if the previous slogan was, “We have the pain of Karabakh...” while the current one is, “Everything is for Karabakh...”

The MPs who set such high fines should realize that fines are ultimately intended to reform violations, not crush citizens “like a sandwich” for profit. Fines should not be a budget-filling tool but rather a supplement to it. For the government, fines serve as an alternative financial source, replacing diminishing oil revenues. It appears this easy yet socially frustrating path to filling the budget through fines has been chosen.

The Unjust Side of Fines

The injustice of these fines lies in the imbalance between the financial burden they impose and the income levels of low-income groups. When the minimum wage in Azerbaijan is currently 345 manats and the average monthly wage is 997 manats, setting fines of 4000-5000 manats goes beyond law enforcement and enters the realm of exploitation. This doesn’t serve to reduce infractions but rather to fill the state budget through fines.

The paradox here is that the revenue from these high fines and sanctions is projected in advance for the following budget year. However, anyone versed in fiscal policy basics knows that fines cannot be forecasted – it's like trying to predict someone’s date of death. How could the government know how many thousands or millions of people will drive without seat belts next year? How many will throw trash from their car windows?

Fines are a form of incidental income, not a fixed revenue source. By relying on fines to fill the state budget, the government has chosen the Dubai model over the Norwegian one. Thus, the revenue classifications for the following year’s budget explicitly include fines.

Looking at these fantastically high fines, it’s evident that the objective is more about increasing additional financial resources for the budget than minimizing violations. In this country, buying a car has become easier than maintaining one, as fines have shifted from a tool for regulating violations to a financial source for the state budget. The goal isn’t to increase safety measures, reduce violations, or foster respect for the law, but rather to fill the state budget through fines.