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May 17, 2021
POLITICS

Will the Fiscal Code be amended or not? Talk of tax hikes angers politicians and business representatives

Wednesday was marked by intense public reactions to press information concerning a draft emergency ordinance that would substantially modify 200 of the 500 articles of the Fiscal Code that came into force on 1 January 2016.

The modifying of social security contribution is among the proposals. Thus, according to the proposals, Article 64, which in the Fiscal Code currently in force stipulates the tax levels, appears under the following form in the new draft bill: “the level of the individual social security contribution owed to the public social security budget is 21.7 percent.” At this moment, the individual social security contribution is 10.5 percent of the gross salary for the employee and 15.8 percent of the salary fund for the employer, totalling 25.8 percent for a labour contract featuring normal work hours and conditions.

According to the proposal, the overall contribution would drop to 21.7 percent of the gross salary, would be fully payable by the employee, and the employer would no longer have to pay any kind of social security contribution.

Likewise, the new draft stipulates the hiking of healthcare contributions from 5.5 to 8.9 percent; the doubling of taxation for authorised natural persons; the introduction of mandatory social security contributions for revenues from agricultural, forestry and fishery activities, and for revenues from leases and investments.

In reaction to the information published, the Finance Ministry announced that Minister Anca Dragu (photo) has undersigned no draft that would include tax hikes or the hiking of mandatory social security contributions. “As mentioned on numerous occasions, the Finance Ministry does not consider hiking taxes this year. The only measures that were and are being sought consist of simplifying tax procedures and adopting measures conducive to economic activity,” the Finance Ministry communique reads.

In her turn, Finance Minister Anca Dragu pointed out that she asked the ministry’s tax experts to conduct an internal analysis that would cover several calculus scenarios for the removal of red tape, the simplification and creation of better conditions for the business environment. “In this context, the hiking of taxes was not considered as a possible scenario for the package of measures that will modify the Fiscal Code. We are not including measures that would create supplementary tax burdens for any type of taxpayer, whether legal and natural persons, authorised natural persons or persons engaged in independent activities,” Anca Dragu stated.

 

Anca Dragu summoned in Parliament to present fiscal situation

 

The Liberals will invite Finance Minister Anca Dragu in Parliament on September 19, in order to present the exact situation in the fiscal domain, Eugen Nicolaescu, leader of PNL’s group within the Lower Chamber, announced on Wednesday, Agerpres informs.

“Because we want everything to be transparent, democratic, next week we will ask the Lower Chamber’s Standing Bureau to invite the Finance Minister in Parliament on September 19. On this occasion, we will ask Minister Anca Dragu to present the exact situation concerning the work being done in the fiscal domain at the Finance Ministry, but, at the same time, it is very important for her to speak before the Lower Chamber about the serious problems that Romania has when it comes to observing the budget deficit. She sent a letter to Parliament, expressing her concern with the fact that we have problems respecting the budget deficit [level] set in line with the Fiscal Treaty,” Nicolaescu stated at a press conference at the Palace of Parliament.

He assured Romanians, including those engaged in liberal professions and authorised physical persons that PNL would not allow the modification of the Fiscal Code in the sense of tax hikes and the burdening of those who show private initiative, who create jobs, who have the courage to invest in Romania.

“I am glad that the Finance Minister has clarified the fact that the Ministry does not plan to modify the Fiscal Code and especially not through emergency ordinance. At the same time, I have to warn the Prime Minister that he has to ask all ministers to abstain, during this elections campaign period and until the end of the [Government’s] term, from drafting any kind of bill or ordinance that would seek to modify the Fiscal Code. I call everyone’s attention to the fact that, in line with the Fiscal Treaty, the Fiscal Code cannot be modified six months before the start of the fiscal year. Consequently, any intention to do so during this period, whether coming from a ministry, an MP or parliamentary group, is reckless and illegal. I’m also calling on the parliamentary groups to abstain from promoting initiatives whose goal is to modify taxes. I continue to believe that we have to pay attention to the Government’s activity but, at the same time, not to criticise it just for the sake of doing so,” the leader of Liberal Lower Chamber MPs stated.

 

Liviu Dragnea: Gov’t not understanding its role

 

The leader of the largest political party says that any draft amendment to the Fiscal Code would be rejected in Parliament.

“We want to stop this initiative if it exists. If it exists, it’s an absurdity. This Government cannot come up with such a package of amendments to the Fiscal Code. It’s really not all right,” PSD President Liviu Dragnea said.

At the same time, PSD President Liviu Dragnea stated on Wednesday, at the start of the party’s National Standing Bureau (BPN) that the Government lacks the legitimacy to “proceed to making fundamental modifications” and that he pins “great hope” on Prime Minister Dacian Ciolos not modifying the Fiscal Code.

“The Government does not understand that it was mainly sworn in in order to manage the country’s affairs, not in order to proceed to making fundamental changes and changes that are not even well-grounded, are not even debated. Probably out of the desire for PR. I’m talking about the latest initiative I saw, the intention to modify the Fiscal Code. This Government lacks the legitimacy to do this and I hope the ministers will understand. In fact, Mr. Dacian Ciolos is my great hope,” Dragnea said.

 

Tariceanu: Ciolos Gov’t lacks legitimacy to propose legislative changes that would lead to tax hikes

 

ALDE Co-President Calin Popescu Tariceanu also warned that the Government led by Dacian Ciolos lacks the legitimacy needed to propose legislative changes that would lead to tax hikes.

“This Government is not a kind of broker of activities, linking the political parties and the ministries it controls. As everywhere in the world, such issues are decided at high political level by governments that have legitimacy,” Calin Popescu Tariceanu said.

 

Victor Ponta: The dismantling of all economic measures that formed the basis of economic growth has started

 

Placed under court supervision by anticorruption prosecutors on Tuesday, in a case in which former British Premier Tony Blair is also mentioned, Victor Ponta criticised on Facebook the measures included in the proposal to modify the Fiscal Code, stating that the current Government has already started “the dismantling of all measures that formed the basis of economic growth.”

“While public opinion is always busy with various “smokescreens,” the dismantling of all economic measures that formed the basis of economic growth (and implicitly of budget resources for pensions and salaries!) has already started!”

“The Technocrat Government already wants to change the Fiscal Code:

  1. Less than a year since it came into force on 1 January 2016.
  2. Through Emergency Ordinance (not through a law adopted in Parliament)
  3. Affects around 200 articles of the Code
  4. Fundamentally changes the fiscal regimen for both companies and employees”

“I wonder what the private investors who asked for legislative stability and predictability are saying now. Or the U.S. and EU ambassadors who always asked for transparency and consultations when it comes to fiscal measures. Or the representatives of the employees, who find their fiscal burden almost doubled overnight? What about those who voted for Klaus Iohannis and wanted a technocrat Government because “Ponta is hiking taxes”; do they feel cheated and manipulated?!? And if, after the December 11th elections, a PSD-ALDE Government comes [to power] – through the will expressed by Romanian voters –, how would it draft the budget and lead the country with the fiscal measures adopted by the Technocrat Government??? I hope you all understand the stake of what is happening these days!”

 

Representatives of SMEs: Amendments to Fiscal Code definitely drafted at Finance Ministry

 

The document on modifying the Fiscal Code has 99 pages, includes multiple amendments and was definitely drafted within the Finance Ministry, according to Florin Jianu, President of the National Council of Private SMEs (CNIPMMR).

The Council is publicly asking to be told who drafted the document and for what purpose, and also who bears the responsibility for the economic consequences of the impact created among investors, employees and employers, Jianu said. Likewise, CNIPMMR expressed its surprise that a 99-page document was drafted solely with the purpose of generating confusion among taxpayers.

The CNIPMMR President pointed out that the Business Sector Governance Plan 2016-2020 report, which CNIPMMR is set to launch on September 13, proposes that the current Fiscal Code should be kept in force unmodified for 4 years; the VAT to be cut from 20 to 19 percent starting on 1 January 2017; the maintenance of the corporate tax rate at 1 percent for micro-enterprises that have a minimum of 2 employees, at 2 percent for those that have 1 employee and at 3 percent for those that have no employees; maintaining the corporate tax rate at 1 percent for newly-established companies with at least one employee and set up for a period in excess of 48 months.

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