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December 7, 2021

Partially retrieved debts are temporary revenue, Fiscal Council official says

Cutting the social security contributions (CAS) cannot be premised on the Government retrieving the liabilities due by insolvent taxpayers, first of all because World Bank reports indicate that the retrieval rate in such cases is 30 per cent, on the average, and the money is collected once only, Chairman of the Fiscal Council (FC) Ionut Dumitru said Thursday, quoted by Agerpres. ‘Premising a tax cutting measure, which is positive to the business milieu, on a temporary compensatory measure is not sustainable in the long run,’ Dumitru explained. Prime Minister Victor Ponta has recently stated that there are clear sources to sustain CAS cuts and, in the years ahead, if liabilities due are retrieved from insolvent taxpayers that would generate some RON 40 billion, but the Insolvency Code must necessarily be promulgated. Dumitru said the money collected in special structure taxes will not suffice to make up for the CAS cuts, although it should be about some RON 1.5 billion, much more than the initially estimated RON 500 million, because the Government has already lost RON 1 billion in the first quarter in uncollected rates and taxes. He said the stakes for CAS cuts are not for 2014, because the measure can be sustained only two-three months, but the problem will be in 2015 and the years after. Vice-President of the European Investment Bank (EIB) Mihai Tanasescu said in his turn that the CAS cuts will not lead to skidding in the Government deficit in 2014 or 2015, but they should be accompanied by compensatory measures. Dumitru and Tanasescu on Thursday attended an interactive debate on the banking industry.


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