The representatives of the Association of Romanian Municipalities met Premier Mihai Tudose on Tuesday, being dissatisfied with the fiscal measures announced by the Government. At the end of the talks, Bucharest District 3 Mayor Robert Negoita (photo) said that the Government will compensate with extra funds from the state budget the drop in local budget revenues caused by the decision to lower the income tax from 16 to 10 percent.
“We set off from a realistic conclusion – that the lowering of the income tax affects local budgets, and the Government representatives also agreed. We agreed we will have compensatory measures in 2018, so that revenues would not drop,” Association of Romanian Municipalities President Robert Negoita stated at the end of talks that lasted two and a half hours, talks in which PSD President Liviu Dragnea took part.
He claimed mayors received assurances that these compensations will mean local budgets will not be lower in 2018.
“We also agreed that in the first half of next year we should meet again and conduct an analysis. In their assessment, local budget revenues will rise, but we can’t know. (…) To the extent things will undergo changes in contrast to what was forecast, we’ll try to find solutions,” Robert Negoita added.
Asked whether the fiscal measures announced by the Government will enter the Tudose Cabinet’s meeting on Wednesday, Negoita answered: “In principle, yes.”
Arad Mayor after meeting at Gov’t: Everyone doubts problems will be 100 pc solved via compensation from Gov’t
Arad Mayor Gheorghe Falca stated on Tuesday, at the end of the meeting that the representatives of the Association of Municipalities had with Premier Mihai Tudose, that everyone doubts that the problems will be 100 percent solved via the compensation that the Government has committed itself to paying to local administrations, but the effect will be seen only six months from now, when a clear assessment will be made. He added that Arad will lose EUR 8 million per year because of the lowering of the income tax, even after it receives a compensation from the Government.
“We asked for the hiking of the quota from the income tax to 60 percent, calculating the need to compensate for this loss. The Government came up with sums for compensation. (…) We tried to explain that we have ongoing projects and we reached this figure of 43 percent and the desire to compensate so that it wouldn’t diminish what a city hall’s surplus means, because that surplus means development. We can say we reached an agreement to run a much clearer analysis of these effects next spring, which confirms that everyone doubts the problem will be one hundred percent solved, but we hope that the development that local administrations generate would not be neglected across the country. When you talk about Romania’s development you are talking about the development of these communities. We will see these effects only 6 months from now. Income tax revenues will drop, depending on the locality, by 22 to 33 percent. We’ll see a form of compensation in 2018 and we’ll see the effect of this law,” Falca stated.
He said that mayors managed to demonstrate, with pen in hand, that local budgets stand to lose money for development.
“At the same time, there is a desire to balance the development, and the municipalities that develop will lose part of their revenues so that they should go, via compensation, to localities that lack this development. It’s very difficult for those who work, are hard-working, are developing, to wake up to the fact they no longer have money. I find it difficult to go to Arad and tell them – you know, we have to cut some of the projects, we’ve developed too fast, we thought the projects too fast, we must hand over money,” the Arad Mayor added.
Asked what did PSD President Liviu Dragnea state at the meeting, Falca said he told mayors to be confident and that an assessment will be conducted next spring.
Mayor of Timisoara to the governors: Stop, you incompetent people! Understand that you’re leading the country to a disaster by what you want to do
Timisoara Mayor Nicolae Robu told the governors that they “will lead the country to a disaster” by the announced fiscal measures, warning on the fact that without the revenues that PSD wants to take from the local budgets by decreasing the income tax, nothing can be done for the cities’ development.
The PNL Timis leader Nicolae Robu warned in a Facebook post that diminishing the quota of the income tax will have serious consequences on the projects in the great Romanian cities.
“Stop, you incompetent people! Understand that you’re leading the country to a disaster by what you want to do! Dear people in Timisoara, we have in Timisoara the lowest local fees and taxes, according to the Liberal doctrine that I and most of you share, as you showed when you voted. Most of the revenues at the local budget are obtained as a quota of the income tax collected within the municipality. Reducing it will simply lead us to bankruptcy!” Robu wrote.
He also said that these revenues helped Timisoara Municipality to support co-financing projects that benefited from EU funds and to pay large infrastructure works in the city.
“With these revenues, we supported co-financing of the projects benefiting from EU funds, with these revenues we paid all the modernization works for the mobility infrastructure of the city, others than those based on EU funds – the Jiul Passage, the Popa Sapca Passage, all the asphalting works on hundreds of kilometers of streets, the projects for building new bridges and passages, thousands of parking places in the neighborhoods, the bicycle tracks, park arrangements, playgrounds, repairs and endowments in schools, hospitals and cultural institutions, festivals and the other events in our rich cultural agenda, etc., etc. Without these revenues which PSD wants to take from us, we can do nothing! ABSOLUTELY NOTHING! Is this what you want, dear people in Timisoara?! Is this what you want, dear people in Cluj, Oradea, Arad, Sibiu, Bucharest, Iasi, Ploiesti, Constanta, Craiova, Pitesti, etc., i one word: dear people of the engine cities of the Romanian society?! I am sure that it is NOT! And I am also sure that you don’t want a politically controlled judiciary, as PSD wants! Or a total lack of predictability regarding fiscality, as the incompetent people from PSD want!” Robu also wrote on the social network.
Gov’t, municipalities agree to keep 2018 local budgets at 2017 revenue
The Government and the Association of Romanian Municipalities (AMR) agreed on Tuesday on a series of measures to keep the local budgets in 2018 at least at the level of this year’s revenues so that the amendments to the Tax Code will not affect the funds for the operation and development of municipalities, according to the Government.
During the consultations that took place on Tuesday at the Government House, the Government proposed to mayors an increase in the share deducted from the income tax revenues for municipalities from a current 41.75 percent to 43 percent, given that the Executive intends to cut the flat income tax from 16 percent to 10 percent.
Compensations would be granted from the national budget when even after the increase of the share for the local administrations’ budgets for the next year will be affected. The official goal is to maintain the local budgets of the municipalities for next year, at least at the level of 2017.
“The Government is considering a balanced development strategy for all local communities. As prime minister, I am equally concerned that the local budgets of both municipalities and small towns and communes have the necessary resources for operation and development. I have come before you with well-founded figures precisely to discuss as actually as possible how things are standing right now and what our vision for the future is,” said Prime Minister Mihai Tudose.