PSD-ALDE coalition publishes new governing programme: Minimum salary and pension point to grow, VAT to drop in 2019

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The PSD-ALDE coalition’s new governing programme was published on the Parliament’s website on Friday. Both the governing programme and the new Government led by Viorica Dancila will undergo a vote within Parliament’s joint plenum on Monday. Compared to the previous programmes, this one no longer contains deadlines.

 

Public administration: Continuation of decentralization project – priority

 

The continuation of the decentralization project but also legislative changes to the public administration represent a priority for the future Cabinet, according to PSD’s governing programme for 2018-2020.

“The one that must take care of the needs of the citizen is the state, through all its administrative structures. It is the state that must create the conditions for ensuring citizens’ needs by providing the basic infrastructure (water supply, schools, hospitals, roads, etc.) in all localities,” the document reads.

For the period 2018-2020, the Government proposes the continuation of ensuring from the state budget / non-reimbursable funds of the sums for implementing the minimum public services package in each locality – healthcare (rural medical dispensary, medical center of permanence), education (schools, kindergartens, daycares), water supply, heating, electricity (public lighting), transport, roads (modernization / rehabilitation of communal and county roads, streets, pedestrian zones, bridges, passages, bicycle tracks), sanitation, culture centres, denominations (rehabilitation of worship places), sports (construction / modernization of sports facilities for mass and competitive sports), social homes, youth homes, company homes for specialists, buildings with seismic risk.

 

Education: Education Law amended by Jan. 1, 2019 at the latest

 

According to the Governing Program 2018 – 2020, the Education Law will be modified by January 1, 2019 at the latest.

“We consider education to be a strategic development factor. (…) Implementing the principle of equal opportunities in education, improving educational performance, the skills and competencies of all children and young people through access to a relevant, quality and inclusive education system are key to economic growth and prosperity,” the document states.

“It is absolutely necessary to increase budget allocations so as to match the importance of education and scientific research for the development of modern Romania,” the program specifies.

The measures listed in the Governing Program include parenting support to make sure the children have a good start in life, ensuring the children’s integration in nurseries and access to pre-school education, and later on to quality education in adequately equipped schools. To this end, investments are pinpointed for the rehabilitation / upgrading of school buildings, but also a Guaranteed Social Package for Education.

Plans also provide for the construction of 2,500 nurseries, kindergartens and after-school units, as well as measures for training teaching staff.

Also envisaged is the expansion of entrepreneurial education to all schools in Romania, re-establishing / modernizing school workshops for vocational and technological education, and the setting in place of a National Directory of Entrepreneur Mentors and of the Student Entrepreneurial Society (SAS) in universities, concomitantly with a National Investment Fund for student-started businesses.

For research, the authorities envisage “predictable and substantial” financing.

 

Diaspora policies: Legislative updates for supporting Romanians’ return home

 

The Executive intends to update legislation with regard to policies for the Diaspora in the governing programme, in order to support the process of Romanians’ return from abroad and to assist the local public administration authorities in concluding town-twinning and cooperation agreements with local public administration authorities from other states so as to achieve and finance investment objectives.

The legislative updates feature the support of the Romanians’ returning home process, through facilitating the levelling of the labour demand and supply, as well as through providing assistance and counselling in view of reintegration into the labour market and the development of entrepreneurial initiatives.

“Facilitating the process of recognition in Romania of the formal and informal qualifications obtained by Romanians who have worked/work abroad will also be followed,” the document reads.

The document also shows that the Government will guarantee free speech, by all Romanians of political options.

As regards the bilateral relations with the neighbouring states and in the Balkans where Romanian natives live, the Government will follow the proper application of the European norms regarding the treatment of national minorities on a state’s territory, as well as a balance between the rights ensured in this domain to national minorities by the Romanian state and those assured to the Romanian minority on the partner’s state territory.

 

Health: 8 regional hospitals, 1 republican hospital, ambulances in each commune, new Health law

 

The Government is committed to backing several major investments such as the construction of 8 brand new regional hospitals and of one republican hospital in Bucharest, the modernisation of most of the county hospitals and the ambulatories and emergency units, the endowment of each commune with ambulances and the adoption of a new Health Law until 31 December 2018 the latest, the 2018-2010 ruling programme informs in the chapter titled Policies in public health.

Besides all of the above, the ruling programme says the Government wishes the minimum endowment of the general practitioners’ offices and their inclusion in training programmes so that the phenomenon through which several patients are crowding in the emergency rooms of the medical units be eliminated.

As regards the health care infrastructure, the Government programme foresees several measures, such as the construction with FSDI (Sovereign Development and Investment Fund) financing of the 8 regional hospitals due to be organised as emergency – excellence centres for all the medical specialisations, including the regional or national telemedicine centres, depending of the specialty, to which the medical centres could connect, for both diagnosis and for a second opinion, too, the cost of such a regional hospital being estimated at EUR 300 million.

These hospitals would count for 1,000 beds, 10 clinics, 1 research centre, state-of-the-art equipment, housing for the medical staff, accommodation infrastructure for the patients’ relatives and attendants (minimum 50-bed hotel).

The Bucharest-based republican hospital will be organised as an emergency-excellence and research centre on all specialities, it would cover over 2,500 beds, 30 clinics, 2-5 research centres, next-generation equipment. Adjacent to this hospital will be a medical campus that will include several facilities: school, kindergarten, shops for the medical staff, as well as accommodation facilities for the patients’ attendants (minimum 2,000 bed-hotel), the estimated cost nearing EUR 1.1 billion.

As for rehabilitation, modernisation or extension, at least 15 county hospitals are targeted, not less than 150 specialty ambulatories and at least 25 Emergency Units.

 

Population to pay 10 taxes, companies maximum 40, from 2019, VAT to drop

 

The number of taxes, rates and commissions with general application in Romania will be no higher than 50 as of January 2019, so that the population will only have to pay at least 10 taxes, while the companies will have to pay no more than 40 taxes, according to the 2018-2020 Ruling Programme.

“We shall simplify the red tape by massively cutting the number of taxes. Starting with 1 January 2019, the number of taxes, rates and commissions (generally applied in Romania) will never exceed 50. So, the population will only have to pay 10 general taxes at the most, of which CASS (health insurance contribution), CAS (pension contribution), income tax, land tax, real estate tax, vehicle tax, etc. All other taxes, rates and commissions will be eliminated or merged. The legal persons will have to pay no more than 40 taxes,” says the release.

Also, as of 1 January 2019 the VAT share will drop to 18pct, from 19pct currently, and the 5pct VAT reduced share will be extended to the sale of dwellings with surface smaller than 120 sqm and for agriculture inputs.

Moreover, authorities promise that a legislative provision will be enforced through which there will be no tax that cannot be paid online and the number of forms asked by the Fiscal Authority will be cut so that the persons with independent activities will have to submit only one form, and the SMEs 5 forms per year.

The new variant of the ruling programme comes back with the idea of drafting an Economic Code that is to include the Tax Code, the Tax Procedure Code, the Law of Establishment of Commercial Companies, the Tax Evasion Law and all of the other economic laws that are to be debated this year in the Parliament.

The main macroeconomic indicators in the document show a budget deficit of under 3pct of the GDP, a public debt below 60pct of the GDP and an economic growth to go over 5.5pct.

 

Justice: Modernizing legislation to prevent abuse by judiciary

 

The modernization of legislation on the judiciary in order to prevent “authority overstepping or abuse by this branch of government”, having the Cooperation and Verification Mechanism lifted during the current term of the European Commission, and improving prison conditions are some of the goals set forth in the 2018-2020 Governing Program rolled out by the PSD-ALDE ruling coalition.

“We intend to modernize legislation on the judiciary to bring it in line with that of other EU member states and prevent authority overstepping or abuse by this branch of government. The same principles will apply to the judiciary as those described for the business milieu, in that we will support the adoption of a ‘fresh start’ milestone before entering the centennial year. We will immediately enforce the decisions of the Constitutional Court of Romania that have not yet been implemented in the Romanian legislation and we will transpose the provisions of the European directives,” reads the Governing Program.

The program also provides that a special department shall be set up at the Ministry of Justice, tasked with reducing the number of legislative acts and correlating them with the European legislation, as well as assessing the legislation of Romania and setting it on a different foundation, beginning with impact studies, to citizens’ knowledge of the law and law enforcement by the public authorities.

As far as human resources are concerned, the program provides for supplementing court staff and balancing, together with the Superior Council of the Magistracy, the schemes of judge panels to reach a ratio of 1.5 to 2 clerks / judge and do away with protracted trials where the solution is handed down in one year, and it takes another year to notify the judgment.

A dedicated chapter in the program refers to improving penitentiary conditions.

 

New governing programme’s stipulations

 

  • The Government will propose the lowering of the VAT from 19 to 18 percent starting on 1 January 2019
  • The strategy for the reorganisation of state institutions will be made public by 1 July 2018
  • A Sovereign Fund for Development and Investments (FSDI). It will consist mainly of profitable state-owned companies and its value will surpass EUR 10 billion
  • Hiking the allocation of money to RON 1,400/month/person for housing in privately-administered homes for the elderly, starting in 2019
  • Hiking the minimum social indemnity to RON 640 starting on 1 July 2018, an indemnity whose beneficiaries will mainly consist of people who worked in agriculture and for whom the cooperatives they worked for before 1989 did not pay contributions. This will result in an income hike for more than 1 million pensioners
  • The net minimum salary will rise annually by RON 100 per year, so that in 2020 it would surpass the equivalent of EUR 300. The minimum salary for employees with higher education will be introduced and will grow by a net sum of RON 150 annually
  • Improving the regulation of the market for precious metals in order to lower tax evasion. The legislative modifications should be announced by 1 March 2018 at the latest
  • The pension point will grow in the next 3 years as follows: in 2018 it will stand at RON 1,100, in 2019 at RON 1,265, in 2020 at 1,775
  • The adoption of the new law on royalties; the continued taxation of extra profits obtained through the extraction of natural gas
  • Extending the income tax waiver to physicians too, starting in 2019
  • The tax on cultivated agricultural land to be eliminated, simultaneously with the doubling of the tax on agricultural land left uncultivated for 2 consecutive years
  • Elimination of the tax on dividends
  • Stimulating the birth rate by offering RON 1,600 – 1,800 per year for every child, on condition the child has at most 10 percent unmotivated absences at school
  • The hiking of the ceiling for the payment of the VAT, from the current RON 220,000 to RON 300,000
  • The issuance of RON-denominated government bonds for the population, with a maturity period ranging from 5 to 20 years, at an annual interest of more than 4 percent, starting this year
  • The reintroduction of the global income tax for natural persons. This fiscal mechanism will be implemented through the integrated IT system organised at the level of the ANAF [Romanian Tax Authority], which will eliminate red tape. Incomes lower than RON 2,000 per month will be exempted and, at the same time, several deductions will be introduced in order to incentivise saving, investments and the raising of the population’s health and education standards.

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