Premier Mihai Tudose stated on Monday, after the ruling coalition meeting, that the turnover tax will not be introduced, telling journalists they should consider the topic closed. He added that this tax was “like a scythe,” so one could not select the blade of grass one wanted to cut, but emphasised that ways will be found to tax those “who think they are smarter than the state.”
The meeting, which took place inside Lower House Speaker Liviu Dragnea’s office on Monday, was attended by Premier Mihai Tudose, Deputy Premier Marcel Ciolacu, Bucharest Mayor Gabriela Firea, several ministers – including Ionut Misa, Sevil Shhaideh and Mircea Dobre – and ALDE leaders Daniel Chitoiu, Varujan Vosganian and Andrei Gerea. ALDE President Calin Popescu Tariceanu did not attend the meeting.
This was the second ruling coalition meeting since the Tudose Government was sworn in, back when it was decided that, when possible, ruling coalition leaders will meet on a weekly basis in order to assess the Government’s activity. The previous meeting took place last week.
Mihai Tudose stated he rushed to announce the decision not to introduce the turnover tax based on the data presented by Finance Minister Ionut Misa.
The Premier pointed out that he took the decision while on a flight from Brussels.
The Head of Government stated that the Finance Minister presented the data during the ruling coalition meeting too, and the decision taken was that the turnover tax will not be introduced.
“Consider the topic closed,” Tudose told journalists.
Asked what were the arguments in favour of no longer introducing the tax, the Premier said the tax was “like a scythe,” so one could not have selected the blades of grass one wanted to cut, the companies that pay profit taxes being also among those who would have been affected. Nevertheless, he emphasised that ways to tax those who “think they are smarter than the state” will be found, referring to companies that do not declare profit in Romania.
Premier Mihai Tudose had stated, following last week’s talks in Brussels, that the turnover tax will no longer be implemented.
“I’ve reiterated, once again, very firmly, that we won’t introduce that extra tax on turnover, that we are predictable in what concerns the financial-fiscal system and that, based on all our simulations and expectations, we will remain within the 3 percent target,” the Prime Minister stated back then.
PSD President Liviu Dragnea stated last Friday that he does not want to comment Premier Mihai Tudose’s statements on the withdrawal of the turnover tax initiative, being of the opinion that the Head of Government “knows what he’s talking about” and expresses the result of an analysis.
“We’ll implement European Directive which stipulates that the tax is paid where the profit is made”
Premier Mihai Tudose stated on Monday that Romania will implement the EU Directive concerning the payment of the tax in the country where the profit is made, as a compensatory measure for the decision to give up the turnover tax, the goal being to avoid the taxation base being shrunk by companies that try to avoid paying taxes.
Tudose explained that the turnover tax idea was dropped, however the idea that companies that are trying to avoid paying taxes should be made to pay will not be dropped.
“In the governing platform, [the turnover tax] was introduced not as a goal in itself, but as a means of trying to avoid certain areas in which certain economic actors simply believe they are more astute than we are. So far it worked for them. We’ll make sure it no longer does from now on,” the Premier said.
He stated that one of the solutions is to implement the European Directive that fights against “the groundless diminishing of the tax base” and which includes, in the subsidiary, stipulations such as the one concerning the levying of profit tax where the profit is made.
Tudose also mentioned the measures taken jointly with the Finance Ministry and the Romanian Tax Authority (ANAF) in order to integrate the financial-fiscal system’s databases, so as to know the “money movements” in real time.
“We’ll be able to monitor how the money unjustifiably leave the country and to find a way, alongside our European colleagues, to levy taxes on this. In fact, there are very large, very nice economic agents that fare very well, that have reported that they have had no profit in the last 10 years. We’ll have to have a type of behaviour toward these,” the Premier said.
“Solidarity tax will probably exist somehow, simulations are being made. Persons who earn a lot should pay more to the state that gave them the opportunity to earn so much money”
Premier Mihai Tudose pointed out that the Government will most likely introduce a solidarity tax aimed at high-income persons who will have to pay the state more because the state gave them the chance to grow rich. He pointed out simulations are currently being carried out, a threshold not being established yet, and claimed that the tax will not be implemented if simulations show it will not be sustainable.
“Work is still being done, simulations. It will probably exist somehow, we’re yet to establish upward of what threshold. (…) It will be levied on physical persons, persons who earn very much, who benefit from a multitude of things from the state (…); above a certain threshold they should pay an extra tax of solidarity with the state that gave them the opportunity to make so much money,” Premier Tudose said.
The Head of Government said he does not know whether the solidarity tax will be implemented starting next year, a threshold not being established yet, considering that simulations are ongoing. He said several scenarios are being tested at this moment, however he offered no details on these simulations. Tudose did not say how much money the state expects to collect in order to consider this a feasible tax.
“If it is established it will be implemented upward of a certain threshold, a certain percentage, and the impact will be very small, we’ll probably not implement it. (…) If the figure is very small and does not matter, the effort would be bigger than the result, it won’t be implemented,” Tudose explained.
PM on sacking Teodorovici: He misunderstood our collaboration and turned into a spokesperson
Premier Mihai Tudose explained on Monday that he sacked honorary aide Eugen Teodorovici because he “misunderstood” his collaboration with the Head of Government, behaving like a spokesperson but expressing ideas Tudose did not agree with.
“Mr Teodorovici was my collaborator and I believe we can collaborate on consultancy, if you want, in financial-fiscal [matters] that he is good at. It’s just he probably misunderstood and became a spokesperson, but I thought I should have found out his ideas from him, not from the press,” Tudose said.
He pointed out he did not even agree with “at least the majority” of ideas launched by the PSD Senator.
Asked about the idea of levying taxes on the Church, one of the topics that Teodorovici had launched, Tudose said his answer to this issue was the sacking of his aide last Friday.
PM on press conference he gave alone in Brussels: I don’t know who else was supposed to be there with me
On Monday, Premier Mihai Tudose commented on the criticism levelled against him for the fact he gave a press conference in Brussels alone, without other EU leaders whom he met during his visit. He said he does not know who else should have been there with him at that moment, apart from journalists.
Tudose explained that the press conference did not take place in a “cellar,” as some televisions had stated, and there was no problem he took part in it alone.
“The press conference took place at [Romania’s] Mission, paradoxically on an above-ground storey; I’m alone with you now too. I don’t know who else should have been there with me at the press conference at the end of the day,” the Premier said.
He expressed his anger with the criticism according to which he was allegedly summoned at Brussels, pointing out that in fact he was the one who asked for the meetings to take place.
“The Liberals – actually only one of them – said I was summoned. I did not hear about this. If you look at the statements I made there, I started off by thanking them for the rapidity with which they received me. I asked to be received, in order to clarify some things,” Tudose said.
PM Tudose says Finance Ministry working on switching contribution payments from employers to employees
Prime Minister Mihai Tudose said Monday, after a meeting of the ruling coalition, that the Finance Ministry is working on a bill that would switch paying employment-related contributions from employers to employees that would come into effect in 2018.
Asked whether or not the switch would be completed before 2018, Tudose said: “We are talking about 2,000 lei, which in fact are 1,500 lei. Yes, the Finance Ministry is working on that. We are starting with the minimum wage to make sure it goes hand in hand with the employers paying the contributions due on the minimum wage for part-time workers on paper,” said Tudose.
Asked whether or not the employees in 2018 will pay the wage taxes only separately, and the employers the social security contributions, Tudose said yes.
About the introduction of a split Value-Added Tax (VAT) account, Tudose said: “We are trying to get the split VAT in place this September, again as a means of financial discipline. We have to make up for delays; there are many things frozen for months on end.”
“The mechanism is very simple. When you buy something, an object of a price base of 100, you pay 119 lei – 100 lei of which stay with the trader’s accounts, while we pay into a pass-worded trader’s account 19 lei. We are trying to avoid those companies that dodge the VAT so that we will not end up with them bankrupted or even missing. If they go missing, they will do so with their money, while the government’s money stays there. That also has beneficial effects: VAT refunding will be much simpler, as the money is already in the traders’ accounts, and we will come up with a mechanism that takes a few days to refund the tax,” added Tudose.
On national budget revision: Unfortunately, we have ministries with 2pct execution level, after 6 months
Prime Minister Mihai Tudose said on Monday in respect of the national budget revision that there are ministries, such as that of information technology, that have a six-month execution level of 2 percent, mentioning that the earmarked amounts for failed projects will be re-allotted.
“The budget revision has been mentioned today at the coalition’s meeting. Mr Finance Minister presented a plan on the re-allotment of money at some ministries, because, unfortunately, we have ministries with a six-month execution level of 2 percent. I am giving an example: the Information Technology Ministry, (…) 2 percent execution level. Unfortunately, certain projects have already been failed and then the money in question will be re-allotted at the same or other ministries,” Tudose said, after a meeting of the ruling coalition.
Asked about the National Defence Ministry budget execution, Tudose said: “At the Defence Ministry, the execution level is very good now. We aren’t talking about an execution level in the procurement area yet, because, as you know, there only have been a few days since the US Congress came up with yet another offering (…) the possibility of purchasing missiles.”
“Ministers managing projects with EC should visit Brussels”
“The ministers who manage projects with the European Commission will pay, by the end of July, a visit to Brussels to explain the projects and to benefit from consultancy”, Prime Minister Mihai Tudose said Monday announcing a decision made at a ruling coalition’s meeting.
“It was established that all Cabinet members dealing with projects with the European Commission should pay a visit to their counterparts, at least until the end of the month, and go up to the top, the president or vice president, to explain the projects, and even get consultancy where necessary,” Tudose pointed out after the coalition’s meeting.