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A public debate among Uzbek economists has exposed deep scepticism about four tax-policy proposals under discussion in Tashkent, with experts arguing that each measure has been advanced without the independent cost-benefit analysis needed to justify it.
The Cashback Question
The government currently pays out roughly 1.8 trillion soums a year in cashback rewards to consumers who demand fiscal receipts at the point of sale—a scheme designed to pull informal trade into the tax net. Economist Otabek Bakirov says the case for abolishing the programme has been made only in one direction. Proponents have listed reasons to scrap it, he argues, but have not presented evidence on the central question: how much previously hidden retail turnover was formalised after cashback was introduced, and would that formalisation hold if the incentive were removed?
Bakirov also challenges the vague assurances offered in place of the 1.8 trillion soums. Statements that the savings would fund schools and kindergartens are insufficient, he says; consumers need a documented guarantee—whether the money flows into participatory budgeting funds, reduces other taxes they pay, or something else entirely. He notes that some households have come to treat cashback as a reliable income supplement, using it to cover internet and mobile-phone bills.
Economist Murod Muhammadjonov says he raised the same accounting problem when the scheme was first introduced. Retailers who were already issuing receipts receive a 1 per cent payment to buyers on those transactions too, meaning the gross cost of the programme must be weighed against the additional tax revenue generated by newly formalised sales—not just against the headline payout figure. It is entirely possible, he says, that the 1.8 trillion soums in cashback payments is generating considerably more than that in budget receipts; no one has published the calculation.
Bakirov proposes an alternative to simply abolishing the scheme: redirect whatever cashback is collected in a given district back into that district’s participatory-budget fund. If a billion soums in cashback is generated in one rayon, that money should be spent on projects in the same rayon. People would then have a direct local incentive to demand receipts, rather than a cash transfer that can feel abstract.
Mandatory Marking and the Operator Problem
A separate proposal would extend mandatory product-marking requirements to vegetable oil. Bakirov says he cannot support it in its current form because the proposal contains no data on the size of the informal market for oil, the share of counterfeit product in circulation, or the expected economic return. Vegetable oil is an everyday staple, and any price increase falls hardest on low-income families—an impact that has not been assessed.
He calls for an independent audit of marking schemes already in operation before any new products are added to the mandatory list, and advocates a moratorium on further expansions until that audit is complete. The audit should be conducted by experts with no connection to the operator or other interested parties, and its findings should be published.
Muhammadjonov focuses on operational failures in the existing system. A misread code on a production line can halt the entire line and require a restart; logistics, unit-level tracking and duplicate-code errors are recurring problems. Adding more products before those faults are fixed risks scaling up the disruption rather than the benefit.
He also challenges the habit of dismissing marking costs as a small share of a product’s retail price. Using an illustrative example: if a product sells for 7,000 soums and yields 700 soums in profit, a 70-soum marking cost represents 1 per cent of the sale price but 10 per cent of the producer’s margin. The producer either passes the cost on to the consumer, absorbs it as lower profit, or both. Reduced profit limits investment in new technology and job creation. The burden falls disproportionately on small manufacturers, because a fixed equipment cost is spread across fewer units than it would be at a large plant.
Bakirov raises a governance point that cuts across both the marking debate and the broader tax discussion: the state is compelling businesses to use the services of a single operator, CRPT Turon. If that obligation is mandatory, the operator itself should be publicly accountable. Its financial statements, revenues, costs and dividends should be visible to the public, and Bakirov says he is raising the question of whether CRPT Turon should be classified as an organisation of public interest. Parliament, he argues, should be asking what economic benefit the operator has delivered and what burden it has imposed.
Social-Tax Exemptions and the Carbon Levy
The debate also touched on social-tax exemptions granted to large businesses. Bakirov argues that it is inconsistent to discuss measures that increase the burden on ordinary workers and future pensioners while simultaneously maintaining zero or 1 per cent social-tax rates for certain companies. Exemptions should be time-limited, he says: if a three-year exemption is granted, the results should be audited when it expires—how much did wages rise, how many workers were formally registered? His observation, though he acknowledges he lacks complete data, is that in some cases the exemptions benefited company owners more than employees. He invites the Ministry of Economy and Finance and the Tax Committee to publish evidence that contradicts that finding.
Muhammadjonov says the absence of published results does not mean results do not exist. Council discussions have included data showing a rising trend in formal employment registration in retail and catering. He cites his own practice: persuading a firm that was officially reporting 70 employees while actually using 300 to register all of them once the social-tax rate fell enough to make full compliance financially rational. He supports targeted exemptions for remote regions or sectors where development is genuinely difficult, but opposes individual exemptions granted to specific companies by closed decision.
On a proposed carbon tax, both economists agree the goal should be to push polluting enterprises toward cleaner technology rather than simply to raise revenue. Muhammadjonov warns that any new levy on fuel producers or fuel-intensive businesses will ultimately be passed to consumers, and suggests examining whether part of the existing excise duty could be restructured as a carbon charge rather than adding an entirely new tax on top. Bakirov adds a practical question: does Uzbekistan currently have the measurement tools to assess emissions accurately enough to levy a carbon tax fairly? He says proponents of the measure should demonstrate the calculation using a specific enterprise—a coal-fired power station or an oil-refining plant—before the proposal moves forward.