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CDR's Anghel: we are currently a bit too green to implement the household tax system
Sending out hundreds of employees to pay their taxes on their own will be a "very delicate" endeavor and we are currently a bit too green to implement the household tax system, work group coordinator at the Coalition for the Development of Romania (CDR) Daniel Anghel told a specialist conference on Wednesday.
"There are 18 countries in the European Union, such as the UK, Italy, the Czech Republic, Portugal, Sweden or Finland, where the concept of family unit does not exist. In another four countries - Ireland, Germany, Poland and Spain - this concept is optional, and only six countries have this concept in place (like Denmark, France, Greece, Luxembourg or the Netherlands). In all EU countries, it's the employer who retains the wage tax. It is my understanding that Romania wants to do exactly the opposite. Sending out, say 1,000 employees, to pay their own tax will prove a delicate endeavor. This is a tax that will have to be paid for the year ahead. In 2018, there will basically be a cash gap. I believe that at this point, we are a bit too green to have such a system in place. This area needs to be far better prepared, and from the point of view of voluntary compliance we would still need a few more steps. There are states with a democratic society of tens, even hundreds of years, and that have little by little shifted to this system or not," Anghel said.
The CDR representative argued that Romania needs to ponder in all seriousness if it wants to implement the US tax model, given that President Trump pursues fiscal cuts as well as the removal of tax deductions, precisely because of the current very tangled legislation.
Anghel added that, with regard to the flat tax rate, CDR wants it kept in place because it has proven its viability.
"It was introduced in Romania in 2005 and its results in terms of budget revenues and GDP growth were spectacular. If I remember well, immediately after the implementation of the flat tax rate, tax revenues rose from 17 billion to 23 billion euro and their GDP share rose from 27.7 pct to 28.5 pct, and this despite a lower tax rate than in the previous system. This flat tax rate system created at that time more than 150,000 jobs that had before gone untaxed, and brought to light revenues from the gray or black economy," the CDR official said.
Representatives of the business community in Romania, as well as of professional associations and organizations, attended on Wednesday a conference on the planned change of the tax system.
The event was organized by the Coalition for the Development of Romania, via the Romanian Businesspeople Association (AOAR), the Romanian Business Leaders (RBL), the American Chamber of Commerce in Romania (AmCham), the French Chamber of Commerce and Industry in Romania (CCIFER), the Romanian - German Chamber of Commerce and Industry (AHK), the Foreign Investors Council (FIC) and the Chamber of Tax Consultants (CCF).