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How strong are the pledges of the economic liberty act? The answer seems to be "not very" - but the Act, by banning the state from setting prices for any goods or services,  could produce some (presumably) unintended very serious side-effects: such as the abolition of free education and the collapse of the government's own health insurance scheme.

President Mikheil Saakashvili (pictured making the announcement to parliament) has made great play of his proposed "Economic Liberty Act" and presnted it to parliament as the most radical measure of libertarianism ever enacted:

"[The act] will turn Georgia into a country, where the irreversibility of the liberal economic course is protected by the superior law [the constitution].

“At the same time, this act is very ambitious, because after its adoption Georgia will become the world’s leading country in terms of observance of economic liberalism.

“Achieving of this goal is of special importance and also possible and needed now, when the ambiguous, disorientated and populist socialist trends are waving around the world shaken by the global economic crisis.

“Sometimes socialist ideology - like only the state can save, the state should regulate, the state should interfere - is heard in such countries that I am totally taken aback.

“Our experience is that nothing good is happening where there is a state.”

He then went on to suggest, in typical Saakashvili style, that this would be the "final liberation from Russia."

But now the details of the act have been published and it is pretty clear that the supposed constitutional guarantees of limits on spending are nothing of the sort - they can be overturned by a majority in parliament - and that the act, far from being a break with the past, is a further ratcheting of Saakashvili's concentration of power in his own hands as it will strip parliament of any power to levy taxes and hand all the initiative to a president relying on plebiscitary democracy.

Mikheil Saakashvili, when launching his proposals, said he was inspired by Georgian 19th century liberal hero Ilia Chavchavadze but looking at the detail it seem the very-far-from-liberal Louis Napoleon might rather more of a guiding light.

The proposals:

1. Referendum on tax increases

This is the only measure that is actually going to be written into the constitution and effectively represents a massive centralisation of power in the hands of the president, who will now have total control of whether tax increases will be proposed.

Although nearly everyone in Georgia appears to think that the president should have less powers and the parliament more this measure explicitly goes the other way with the constitution being amended to state:

"Introduction and increase of overall state taxes, along with the addition or extension of a taxation subject shall be possible only through a referendum, the initiative for announcement of which may be exercised by the President of Georgia"

This constitutional change will be implemented through a new "organic law" - essentially an act of parliament passed by an abolsute majority of that body's members (and subject to repeal in the same way - though the president has a veto power in both cases).

It will say:

Article 2. Rights of the Georgian Citizens to Restrict Overall State Taxes

1. From the enforcement date of the present law:
A) New overall state taxes may be introduced only through a referendum;
B) Increase of the current overall state tax rates may only occur through a referendum;
C) Changes to income and profit taxes are prohibited if they will apply to the taxpayers in a differentiated manner;
D) Extension of the current overall state taxation base and addition of a new taxation subject may only occur through a referendum;
E) Initiative on announcement of a referendum as provided for under Clauses A, B and D of the present Article may be expressed only by the President of Georgia.

2. By the enforcement date of the present Law the overall state taxes envisaged in the Tax Code of Georgia are as follows:
a) Income Tax;
b) Profit Tax;
c) Value Added Tax (VAT);
d) Customs Tax;
e) Excise Tax.

3. Property tax rates are set under the rules defined in the Tax Code of Georgia.

4. Referendum on the issues referred in Clause 1 of the present Article is held in line with the Law of Georgia On Referendum.

5. It is prohibited to hold a referendum on the introduction of a tax with a progressive principle.

6. Provisions made in Clause 1 of the present Article do not apply to excise taxes.

So straight away we can see that while this is an exceptionally libertarian set of policy provisions most of it is no less repealable than a normal parliamentary law. Furthermore it seems to leave open the prospect that parliament can legislate at will to increase property taxes - meaning that the act far from closes off tax increases - it just directs them in one particular direction.

2. Limits on public spending and borrowing

Here there are no proposed constitutional guarantees at all - beyond a stipulation that spending policies have to be set out in the organic law:

To ensure a stable long-term economic growth the macroeconomic parameter thresholds and fundamental principles of the economic policy are defined with the Organic Law of Georgia.

The proposed organic law is also full of loopholes:

Article 3. Delienation of Limits to Macroeconomic Parameters

1. To ensure public well being through a long-term economic and stable growth and to facilitate the transfer of country with decreased financial liabilities for management to future generations the following ceilings of macroeconomic parameters are defined:
A. Correlation of a consolidated budget with GDP - no higher than 30%;
B. Correlation of a consolidated budget deficit with GDP - no more than 3%;
C. Correlation of public debt with GDP - no more than 60%.

2. It is not permitted to have the budget approved by the Parliament of Georgia in excess of the ceilings set in Clause 1 of the present Article.

3. If the ceilings defined in Clauses 1A and/or 1B are breached the Government is obliged to develop and submit for approval to the Parliament of Georgia a plan to revert to the thresholds defined in Clause 1 of the present Article with average indicators of the budgets earmarked for the breached and the immediately following three years.

4. Parliament of Georgia approves the plan submitted by the Government provided the requirements of Clause 3 of the present Article are met.

5. Plan referred to Clause 3 of the present Article should incorporate the obligatory reduction of the budget earmarked for the year immediately following the threshold breach to the levels within the ceilings envisaged in Clauses 1.A and 1B of the present Article.

6. Budget formation for the state, autonomous republics and local self-governance bodies should occur in line with the aims and goals of the programmes.

Article 11. Deviation from Macroeconomic Parameters in Exceptional Cases

1. Deviation from thresholds envisaged in Article 3.1 is possible during wars and/or if state of emergency has been announced on the entire territory of Georgia.

2. In cases envisaged in Clause 1 of the present Article the budget parameters shall return to the thresholds indicated in Article 3 of the present Law in the following year from the completion of the war and/or nationwide state of emergency if no economic recession is developed.

3. Except for the cases mentioned in Clause 1 of the present Article deviation from thresholds envisaged in Article 3.1.A and/or 3.1.B is permitted only in the conditions of economic recession.

4. For the purposes of the present Law the economic recession is deemed to exist when negative growth of GDP is witnessed in successive three quarters of any year.

5. No later than in three years from breaching the thresholds envisaged in Article 3.1.A and/or 3.1.B the consolidated budget parameters shall return to the referred thresholds if the breach has been caused by economic recession.

6. Average indicators of budget parameters in the year when thresholds envisaged in Article 3.1.A and/or 3.1.B were breached and immediately following four years shall meet the limits set under the present Law if the breach was caused by the economic recession.

7. In the conditions of an economic recession if the thresholds envisaged in Article 3.1.A and/or 3.1.B were breached the Government of Georgia is obloiged to develop a plan by years of budget parameters for returning to thresholds indicated in Article 3.1.A and/or 3.1.B in the Law of Georgia On Budget for the same year in line with Clauses 5 and 6 of the present Article.

In other words the limits on spending only have the force of law - they are not constitutionally protected and that the government can break them any time it declares a state of emergency or if there is a recession. And if there is a recession the government can break the limits in the law for three years.

3. Limits on regulation

Again, there is no constitution protection offered here - not even the stipulation that this issue should be dealt with in the organic law. So there is no barrier to this being repealed at any time.

The proposals in the organic law could potentially lead to huge difficulties with moving towards European standards of regulation or if Georgia is obligated in the future to take steps towards, for instance, de-carbonising its economy by imposing new regulations on vehicles or motors or industrial processes.

More worrying still is the proposed sub-clause 7 which purports to ban the state from setting the price for any good or service - there does not seem to be any protection for, say, free education or even for the government's own health insurance scheme which is very much a mechanism for price regulation - contributors pay a set amount and are guaranteed, by the state, a minimum level of service.

Article 7. Prohibition of Restrictions Over Freedom of Economic Activities and Extension of Regulated Fields

1. Types of licenses and permits currently being in effect in Georgia along with the applicable obligations which imply the application of contextual license or permit regimes on any economic activity should not exceed the total number of licenses and permits existing under the Georgian legislation by the enforcement date of the present Law.

2. If the number of restrictions under Clause 1 of the present Article equals the total number of licenses and permits promulgated under the Georgian legislation by the enforcement date of the present Law the new licences and/or permits types may only be introduced if current ones are abolished, while the initiator of the applicable draft law should justify which license and/or permit should be abolished to substitute it with the recommended one(s).

3. From the enforcement date of the present Law it is prohibited to extend the coverage and/or terms and conditions towards tightening of the current licenses and/or permits.

4. It is prohibited to introduce an obligation, which envisages the application of licence or permit regime in a contextual manner over any type of economic activity or action, while if such obligation exists by the enforcement date of the present Law it should either turn into a licence/permit or be abolished.

5. In all the relevant cases the Government of Georgia shall submit to the Parliament a list of licence and permit types along with such restrictions that imply the application of licence or permit regimes in a contextual manner over any economic activity or action.

6. In cases when the number of licences, permits and other types of restrictions presented in the submitted list exceeds the quantity envisaged in Article 7.1 of the present Law the Government shall develop a package of legislative amendments to be approved by the Parliament with an aim of honoring the provisions laid out in Article 7.4 of the present Law.

7. Public institutions are prohibited to set prices/tariffs on any type of goods/services and exercise control over them.

8. It is prohibited to create/have in existance such national independent regulation or other type of body, whose competence involves price and or tariff setting over goods and services, except the current scope of competences defined for existing regulators by the enforcement date of the present Law.

9. The state is prohibited to own or have title ownership over a commercial bank share and/or equity in other financial institutions.

10. If the state has acquired the right restricted under Clause 7 of the present Article it is obliged to transfer it within a year.