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Employers' org leader says tax package leads to blockages without gov't reaching collection targets
The package of tax measures published on Tuesday by the government poses a series of major problems, with the most uneconomic of the measures being the taxation of the turnover of the largest companies in Romania, according to executive director of the Concordia Confederation of Employers' Organisations Radu Burnete.
"A first reaction to the package of tax measures that I have only seen today, after two months of discussions without an official text, is that it poses a number of major problems, of which I will point out two. The first is the ratio between income and expenses. The government wants to collect 100 billion more by 2028, but saves only 16 billion in the same period. While initially there was an equal effort, now the effort is 85% on the private sector and 15% on the public sector. On the expenditure side, the proposed measures are unconvincing," Burnete is quoted as saying in a press statement released on Tuesday.
The second problem, in his opinion, is that it keeps in place what he calls the most uneconomic of all the proposed measures, namely the taxation of the turnover of the largest companies in Romania.
"We have recently published an extensive analysis in which we explain why this tax will be transferred to prices, is discriminatory, will reduce investment and will affect many Romanian companies that we should encourage to expand in the region, and will have an impact particularly negative in many economic sectors. The governing coalition will have to live with the dire economic consequences of such a measure that we said and keep saying will not be long in coming," he adds.
Burnete says that he will present all the problems he anticipates at a meeting of the Tripartite Council on Wednesday, but draws attention that there is no more time for consultations and expects these measures to create blockages in several industries, without achieving their goals of better tax collection.
"We finally have a text, but very little time for discussions, a few days practically, if anyone still has the patience to listen. Tomorrow, the prime minister has called the employers and unions for a Tripartite Council meeting. We will show up to understand what the government has in mind, now that we have an official package on the table, and we're going to point out all the problems we anticipate. We don't have time to do a thorough evaluation of this bill, beyond the big problems it has. We expect to soon discover errors of a legislative nature in it. Beyond these errors and the turnover tax that I mentioned earlier, many of the measures are not limited in time, do not leave enough time for adaptation, do not have clear deadlines for coming into force, and we expect them to create blockages and problems in several industries, without reaching its tax collection targets. We understand that the government has to solve the problem of the its deficit, but at first sight we are not convinced that it has chosen the right solution and we regret that for several months we discussed on rumors and now that we have an official proposal, we only have one-two days for consultation," says Burnete.
The Ministry of Finance published on Tuesday a bill on tax and budget measures to secure Romania's long-term financial sustainability.