CIS president: We fear state will take with two hands in 2015 what it gave with one

Investors will not release more resources immediately, as in just three months the social insurance contributions (CAS) reduction is not a convincing measure and private businessmen fear that in 2015 “the state will take with two hands what it gave with one”and will increase taxes, said Mihai Bogza, the president of CIS.

“Until 2013, Romania was above average in the world classification on taxes in EU, although taxes were higher than the EU average and I don’t think the services offered by the state to those who paid taxes were better. In 2014, before the drop of CAS, taxes went up. The reduction of CAS comes at the end of the year. We cannot talk about resources made available by the private sector since the state attracted first resources from private businessmen to be used in the public, less performing sector,”said the head of the Council of Foreign Investors (CIS) at an event on economic topics.

He showed that the CAS reduction must be maintained for some time and taxes should remain the same in order to decide on investments and new hirings by private companies.

On the other hand Bogza mentioned that on the background of increasing taxes in the first part of the year, private companies adjusted investment plans so technical recession could continue in the third quarter.

As for foreign investments, the CIS representative considers that although the 13% drop in the first 7 months is not much, the stabilization of the foreign capital flow attracted by Romania in the last 3 years at 2 billion Euro is alarming.

“Two billion euro is very little compared to the pre-crisis period and the country’s potential. What is worse a large part comes from covering losses recorded by companies in crisis. What we see now is not a new investment, but mostly for the completion of funds exhausted by the crisis,”Bogza added.

The Romanian authorities has last week in Brussels, an evaluation meeting with IMF, EC and WB on the second budget rectification.

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