Europe, Romania, Politics

The Great Romanian Tax Scrap

The Head of the PSD (leftist party), Liviu Dragnea, has scraped 102 taxes for 2017, days before the official election has started. This action violates the Constitution and the Fiscal Responsibility Law: it is against the law to cut taxes before elections; it has to specify the funding source for measures of this kind.

Some of the tax scrap plan will include: taxes for the commerce registry, for securing copies of fiscal records, fees for the issuance of temporary passports, licensing fee (TV and radio), fees for recreational or sport fishing permits, and environmental fees for car registration. At the moment, Romania is facing suffocating bureaucracy at the administrative level. Besides lowering taxes, this initiative will benefit certain sectors by increasing salaries without any budgetary resources for health, CNAS employees (National House for Health Insurance), and education.

“These are taxes that consume but does not bring income to the state. They bring only the lack of confidence for citizens or have the intention to humiliate them. The counter is a place of humiliation. In Romania, it takes about eight days of torment for a car to be registered. Most Romanians need vacation so they can pay all these taxes.” — Liviu Dragnea

The Minister of Labour, Dragos Pîslaru, has stated that the future government will face an impossible situation of making cuts from investments, having more than 3% deficit in the budget, or contracting new loans. The budgetary impact at a first estimate will be somewhere around 3-4 billions lei.

Dacian Ciolos, the prime-minister, has concluded that: “We need investments in order to create sustainable jobs. (…) we made great effort this year, we wanted to thoughtfully increase salaries. Salary increases that solve problems and failures in treatment between different categories in the same sector, but also that lead gradually to a sustainable income growth of their respective employees.”

The European Commission and the International Monetary Fund have repeatedly expressed their concerns about Romania’s budget for 2017 in case these measures pass. The budget deficit target assumed by Romania in the European institutions is 3%. Overcoming it would attract sanctions from the European Commission together with the weakening of confidence in the financial stability of Romania.

Other critics of the law are afraid that in sync with the TV and radio tax reduction, the public television will lose its independence. The TV and radio tax is mandatory, every home has an extra fee attached to their power bill, even for people who don’t use the service.

Many of the tax reductions correspond with what most of Romanians need and request. Remember that Romania is in second place in the EU in terms of poverty, which is a result of the poor administration and corruption throughout the country. The minimum salary is about 280 euros while a rental studio is about the same price.

The majority of voters believe that simplifying bureaucratic procedures has to be a necessary initiative and should have been done sooner than it was. But it doesn’t change the fact that these measures were brought to the public’s attention only a few days before the election has started, reminiscent of another electoral bribe, a more discreet one.

A similar situation had happened in 2008 under Boc governance. A series of tax scraps had been approved before elections but had not entered in effect because of the limitation of the budgetary resources. At the moment, the proposed tax reductions will be challenged in the Constitutional Court of Romania.

About Ioana Miron

Ioana grew up in Bucharest, Romania and recently finished her master’s degree in journalism, international cooperation and humanitarian aid from the National School of Political Science and Public Administration. She’s an extremely intelligent, motivated, self-reliant and creative young woman always on the prowl for injustice to expose. Ioana’s impressive thirst for knowledge is only surpassed by her kind and generous heart.

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