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Chairman of the Fiscal Council: the investors are more affected by the fiscal impredictability than by the level of the taxes

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The impredictability of the fiscal measures and their impact on the investors are more negative than the level of the taxes, as the taxes could increase as easily as they were reduced, when the pressure on the budget grows, stated Ionut Dumitru, the chairman of the Fiscal Council.

‘The most pressing issues for companies, according to the statistics of the European Commission are represented by regulations, not only for taxes but for environment protection, the harmonisation with other regulations in different sectors. Predictability is important as part of regulation. In vain do taxes drop, if the predictability is as little as before’ Dumitru said in a conference organised by BNR regarding the business environment.

When referring to the amendments brought on Tuesday by the government to the Fiscal Code which have not become valid yet, he appreciated that ‘ they tell a lot’ about the way in which things go at the level of economic policies in Romania.

‘It is obvious that the business environment receives with joy the fact that the taxes drop, more rapidly than it was previously announced, but they also have to question themselves if they drop so quickly in two-three days, maybe at a certain moment when the pressure is very high on the budget, couldn’t they increase as easily” Dumitru said.

The chairman of the Fiscal Council appreciates that impredictability is ‘ more negative’ and the impact for the investment environment is more negative than the level of the taxes’.

At the same time,he says that serious investors will not place money on a long term in Romania if they don’t find predictability and even if they receive with joy the measures for short term, they appreciate structural reforms more.

‘Romania is better at stability than the neighbouring states, but it is not sufficient as the infrastructure is still a major issue. You can have small taxes, but if the business environment do not consider them as predictable, you will not have investment for long term, from serious investors’ the head of the Fiscal Council said.

On the other hand, he showed that an average company in Romania pays almost 42% of the commercial profit, easily above the European average, especially the pressure coming from the work taxes, according to the competitiveness ranking of the World Bank ‘ Doing Business’ launched on Tuesday.

Dumitru showed that it would be appropriate for the business environment to have a more reduced fiscal burden on work in Romania where even after the reduction of five percentage points, on the area of income relatively small, up to 70 – 80% from the average income, the biggest fiscal burden on work from Central and Eastern Europe is found here and one of the biggest at European level.

The government estimated a negative impact of the measure for the CAS reduction by five percentage points on the budget of 4.4 billion lei per year, between 2015 – 2019.

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