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April 16, 2021

Romanian Business Leaders does not uphold global income tax

Angela Rosca, a member of the Board of Directors of Romanian Business Leaders (RBL) and TaxHouse Managing Partner declared in a press conference on Wednesday that they do not support the income tax recently released in the public space because the population will not go to tax consultants as they do to the family doctor to give the money they owe the state because this money may already be spent.

“We are worried about what will happen to the entire population who will receive this money (wages, ed.n.) from us, employers, monthly, and will spend it. In May-September 2019 when they have to give the money they will voluntarily go to these tax collectors, because it is too much to say tax advisers, as if going to the family doctor and will give them the money. We do not believe in this hypothesis. This will create a whole social problem We will have to educate these employees. We may have to safeguard their money to make sure that at the end of 2018 they still have money to give after the May financial statement is submitted,” Rosca said.

“RBL supports the flat income tax (…) a system that has proved its efficiency, contributed to the economic growth, brought out the gray and black economy, and we do not support this household income tax recently released in the public space. This system implies a shift of the entire fiscal paradigm. It makes a non-transparent transition to a progressive tax system. It is actually what we are really concerned about. By proposing a two-quota system, 0 pct and 10 pct, in reality, based on the project, there are 4 quotas, 0 pct, 3 pct, 10 pct and 16 pct. We have 4 quotas on different types of income in the amendment draft of the Tax Code,” said the TaxHouse official.

She specified that the International Monetary Fund’s assessment reveals a 12.2 billion lei budget impact, or 1.4 pct of the GDP, “strictly as a result of the reduction in the amount we now pay, from 16 pct to zero, for those who will be under the ceiling of 1000 lei / person, respectively 10 pct for those who are above the non-taxable ceiling.”

“An amount of 3.48 billion lei is added, says the IMF, from the VAT reduction proposed for next year, and another 8 billion lei from the reduction in social contributions that will drop to 35 pct. We are overall talking about 23 billion lei. We wonder what the state budget will be financed from in 2018, because the concept of withholding tax is completely abandoned,” stated Rosca.

The National Agency for Tax Administration (ANAF) is barely able to face VAT registrations, and the global income tax draft wants to register 7 million households, Angela Rosca added. Moreover, she further said, there is no fair tax burden between the various types of income, and the labor income will be taxed more than the investment income.

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