Flat tax to remain at 16 pc this year


The lowering of the VAT on foodstuffs depends on the results on bread, Finance Minister Ioana Petrescu added.

The flat tax will be maintained at 16 per cent throughout this year, but starting in 2015 it could be maintained solely for companies, while a progressive tax will be instituted for the population as a fiscal relaxation solution if the budget allows it, Finance Minister Ioana Petrescu stated. “The differential tax was also discussed, but lower tax levels for lower income persons. The flat tax will be maintained in 2014,” Petrescu stated on Antena 3. The governing program entails the introduction of the differentiated tax on the salary income, with thresholds of 8, 12 and 16 per cent.
The Finance Minister explained that fiscal relaxation for those with low incomes cannot be applied if there is no budget room for it, because there is a law that stipulates that “if you take something from the budget you have to put something back.” The same philosophy is applied in the case of lowering the social contributions by 5 percentage points and of not taxing reinvested profit, measures for which various scenarios and analyses are being conducted at this moment. “As far as I know the lowering of social contributions by 5 percentage points in July, so for six months, will have an impact of approximately RON 2 bln on the budget,” Petrescu added.
The new Finance Minister does not agree with a tax amnesty even though such a measure would bring extra budget revenues on the short term, pointing out that such practices weaken voluntary conformity in the medium and long run. “If we want to have a growth in collection on the medium and long run, for it to be at the European Union’s average, a lot of reforms and a lot of time will be needed in order to do that in a sustainable manner,” Petrescu added.
At the same time, Minister Ioana Petrescu added that a possible measure of lowering the VAT for a series of foodstuff products will be decided strictly depending on the results of the analysis on the effects that the lowering of VAT from 24 to 9 per cent for bread and bakery products had. “We have chances, but it strictly depends on the results we see in the case of this measure for bread. If the results look very good then of course it would be very good to do this for meat, vegetable or fruits. If the results are not good it means we won’t be doing something bad twice,” the Finance Minister said. In this context, the minister emphasized that for the time being she cannot say whether the policy of lowering the VAT will be extended because the analysis on bread has not been finished and she is the kind of persons that “measures three times before cutting once.”
The Finance Minister pointed out: “At first there is a report concerning several months. We know very well that a report that includes data from just several months is not giving us a lot of information. There has to be a longer period of time and once we analyze and think about what were the effects on collection and on the number of tax payers that came to light we can say whether we will expand it.” Ioana Petrescu added that she wants to come up with a series of well-thought and well-analyzed public policies and the impact assessments should be conducted before a measure is applied, not after.

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