The Government on Wednesday will consider a draft ordinance amending the Tax Code, including the transfer of social contribution payments from employers to employees, Finance Minister Ionut Misa said on Monday.
“We have had a discussion with the prime minister. The prime minister has had talks at the party and on Wednesday a government meeting will be held, as announced, that will include the ordinance as already read for the first time, complete, with the transfer of contribution payments,” Misa explained, adding that he discussed with the prime minister in the afternoon.
“He told me that he had a discussion at the party level and on Wednesday the ordinance will enter the government meeting,” said Misa.
According to him, the government meeting to debate the ordinance amending the Tax Code announced for Monday was postponed because “there were some delays in opinions being issued on it,” but now “we have all the opinions”.
Asked if the uniform public pay law could be applied as adopted, with a 25-percent wage increase as from January 2018, the minister replied that it could apply without any problems because “at the time the transfer of contribution payments was thought as a measure in the governance programme, the whole range of tax measures was taken into account and there will be no negative effect on the pay law.”
About the negative opinion issued by the Fiscal Council on the draft ordinance amending the Tax Code, Misa said that the organisation raised some issues that were mentioned in the substantiation of the draft in terms of impact, but that implementing the measures provided for therein will be no problem.
“There is really a negative opinion from the Fiscal Council. The Fiscal Council raised some issues that we included in the substantiation of the draft, the impact assessment, the ones we took into account, so it’s not a surprise from this point of view, but implementing these measures will not be a problem in terms of the 2018 deficit or budget,” Misa said.
PM Tudose on Tax Code: Gov’t might not discuss it on Wednesday
Contrary to Misa’s statements, Prime Minister Mihai Tudose said on Monday that the Government on Wednesday might not discuss the amendments to the Tax Code.
Asked if switching the payment of social security contributions from employers to employees will be discussed at the government meeting on Wednesday, Tudose said: “It might not be Wednesday.”
Attending a meeting of the Romanian Association of Municipalities (AMR), Tudose said that the fiscal package also concerns other things that have economic and financial aspects.
“Do not understand that the fiscal package only concerns these things; there are many things that take into account economic and financial aspects of regulation in the fight against contraband, better discipline of Value Added Tax (VAT) payment. We are talking about a larger package, even if the contributions are not included in the first meeting on Wednesday, or at least I believe they will not. Many colleagues believe that things will be offset by a formula set up with you, from large municipalities, from the Bucharest City Hall to the smallest commune in Romania. We do not want to create imbalances, on the contrary,” Tudose said.
He showed that a balanced development of the country is needed.
“You all have over 10 billion lei in your budgets, which are not used, which simply stays idle. The calculation has not considered factoring in the minimum wage. There was no meeting yesterday or the day before, or today, and that will not be regulated until we, together with you, agree on that balancing formula you were talking about. Infrastructure and other services have been achieved using the money of the whole country. When we finish the simulations on this budget balancing formula, we’ll validate it with you. A balanced development of the country is needed,” Tudose said.
His comments came in response to statements made by AMR Executive Chairman Ilie Bolojan who said that the Government’s intention to modify the Tax Code is one of the issues that concern the association.
“This intention, which we do not dispute in the form in which the proposals have been made, leads to a smaller amount we consider for calculations namely in the aggregate income tax, which means a reduction in the tax base of about 40 percent according to our simulations; given that the aggregate income tax accounts for about half of the revenues of a municipality in Romania, our calculations show that our income, out total own revenues, would decrease by at least 20 percent, if this measure is approved without there being any other form of offset for the loss in the aggregate income revenues,” said Bolojan.
In his opinion, the simulations made by AMR show that in fact an increase in the public healthcare fund revenues is done to the detriment of the funds that remain with the local administrations, and the main affected areas are not the communes of Romania with very few employees, but the municipalities where about two thirds of the country’s employees are employed.