Radio România Internațional

Tag: special

  • Tax on special pensions, disputed

    Tax on special pensions, disputed

    On Wednesday, the Chamber of Deputies passed a bill that introduced taxes on pension benefits. The bill had already been endorsed by the Senate in 2019, and it was backed by all parliamentary parties. It is meant to restore social justice, the MPs argued, given that disparities between the regular pensions and the pension benefits laid out in special laws are, in certain cases, outrageous.



    Perhaps the most insistently covered case is the 15,000-euro pension—the biggest in Romania—paid to a former communist prosecutor who was the commander of a prison. At the opposite pole, the average pension in Romania is little over 250 euros.



    From now on, according to an amendment introduced by the Social Democrat Party and Save Romania Union in opposition and by the Liberals in power, “pension benefits of up to roughly 410 euros are tax-free, those of up to 1,450 euros are subject to a 10% tax, while for pensions of over 1,450 euros, there will be an 85% tax charged for the amounts that exceed this threshold.



    Beneficiaries of these so-called special pensions in Romania include, among other categories, judges and prosecutors, MPs and mayors. Military pensions also have a special status.



    The bill passed on Wednesday did not include Senators and Deputies however, because this required a change in the statutes of MPs. And on Thursday, Parliament reviewed a bill modifying the Fiscal Code and approved the progressive taxation of MP pensions.



    Opposing the parliamentary majority, the Save Romania floor group tried in vain to introduce a bill discarding special pensions for MPs, and explained that progressive taxation of these pensions does not need to be voted by the joint chambers of Parliament. This will lead to the Constitutional Court dismissing the law, on grounds that the same bill was actually voted on twice—once by the Chamber of Deputies as a decision-making body, and once again by the joint Chambers as a Fiscal Code amendment, Save Romania Union president Dan Barna argued.



    He explained that “this is just like a movie where you shove a pack of dynamite at the constitutional foundation of this law, making sure that the Constitutional Court will reject it.



    Conversely, the Social Democrats and the Liberals argued that there are Constitutional Court rulings that require joint Chambers votes on amendments to the statutes of MPs. Both parties emphasised that the law ensures social justice, and voiced surprise at the opposition of Save Romania Union.



    Quite predictably, the Constitutional Court has been notified, by the High Court of Cassation and Justice and the Ombudsman. The supreme court says the bill overlooks successive relevant Court rulings, that the Higher Council of Magistrates has not been consulted and that a number of principles are breached, including the fair taxation principle and the independence of judges.



    Last month, the Constitutional Court dismissed another bill abrogating special pensions, following notifications filed by the supreme court and the Ombudsman.


    (translated by: Ana-Maria Popescu)

  • Tax on special pensions

    Tax on special pensions

    A recurrent topic in public debates in Romania, the taxation of the so-called “special pensions, which are not based on prior contributions to social security funds, seems to have been finally settled. On Wednesday, the Chamber of Deputies approved, almost unanimously (307 votes in favour and only one against) the introduction of a tax on the balance between special pension benefits and the pension determined by regular contributions to the public pension fund during employment.



    Pensions between roughly 400 and 1,500 euro (some 7,000 lei) will be subject to a 10% tax, as it has been the case so far; however, for amounts in excess of this threshold, the tax will be 85%.



    The decision regarding the progressive taxation of special pensions was taken in an accelerated procedure, by all parliamentary parties. The former labour minister, the Social Democratic Deputy Lia Olguţa Vasilescu, promised that the document is in compliance with constitutional provisions:



    Lia Olguţa Vasilescu: “We fully complied with the Law on public pensions, but if a magistrate or an MP or whoever receives pension benefits in excess of 7,000 de lei, up to that level the tax will be 10%. Nobody can tell the Constitutional Court that their rights have been infringed on.



    The leader of the Liberal group in the Chamber of Deputies, Florin Roman, was just as straightforward:



    Florin Roman: “Obviously, there must be lots of judges, lots of prosecutors, lots of police or army chiefs who are very upset about this. But what we are doing here, with this bill, does justice to the military, to police officers, where there were huge gaps between the pensions paid to those who had been in theatres of operations and those paid to high-ranking generals just sitting in an office.



    According to data communicated by the Public Pensions Agency, the number of people receiving special pension at the end of last month was around 9,500. Nearly 4,100 of them are covered by the Law regulating the prosecutor and judge professions. One of them is the recipient of the largest pension in Romania, over 19,000 lei. Special pensions are also paid to around 150,000 former employees of the public order and national security systems.



    Observers have noted the unusual consensus reached by parliamentary parties in this respect. Somehow, they say, this was bound to happen. On the one hand, because, given the COVID 19 pandemic and the enormous public spending it required, the scheduled 40% increase of regular pensions this autumn is increasingly unlikely. And secondly, because in a few short months Romania has local and parliamentary elections, and no party will refrain from trying to humour voters with measures that people agree with.


    (translated by: Ana-Maria Popescu)

  • January 30, 2020

    January 30, 2020

    PARLIAMENT The Social Democratic Party, in opposition, has today tabled its first motion of censure against the Liberal Government of Romania. The move was triggered by the Orban Cabinet’s decision to take responsibility for a bill reintroducing the 2-round voting system for the election of mayors, half a year ahead of local elections. The text of the motion entitled ‘The Orban/Liberal Government – the privatisation of Romanias democracy reads that the Government must go not only because attempting to change the voting system right before the election comes against European standards, but also because these changes were operated unilaterally, without parliamentary consultation and debate. According to the Speaker of the Chamber of Deputies and interim leader of the Social Democrats, Marcel Ciolacu, this is the most serious case of abuse of power. For the motion to pass, the Social Democrats need 233 votes. The party has 198 seats in Parliament, and their allies, the Democratic Union of Ethnic Hungarians, another 30. With 5 or 6 votes short, Marcel Ciolacu said the Social Democrats are negotiating with fellow MPs. PM Ludovic Orban said he was unconcerned with the motion, and that he does not believe it has any chances to pass.




    PENSIONS The president of Romania Klaus Iohannis has a meeting today with top officials for the Higher Council of Magistrates, at their request. The meeting focuses on the scrapping of special pensions for magistrates, following the vote in Parliament on January 28th. Magistrates have initiated protests against the decision. Initiated by the Liberal Government, the bill passed by Parliament scraps all pensions that are calculated under a special procedure, except for those paid to military, police and intelligence service personnel. The benefits paid to retired artists, athletes and journalists also went untouched.




    FLU Ten people died in Romania from seasonal flu so far, according to the National Centre for Infectious Disease Monitoring and Control. The last death was reported in Sibiu (centre), where a 90-year old woman was infected with the AH1N1 flu virus. Several schools in Bucharest and elsewhere in the country were also closed because of flu cases. The Education Ministry announced that full or partial suspension of classes because of the flu affects over 4,000 students, but that this is not the number of cases among children.




    CORONAVIRUS The head of the World Health Organisation has called a new meeting today of the committee on the new coronavirus, to decide whether to label the situation as an international public health emergency. Airlines around the world have decided to suspend or restrict flights to continental China, as the virus spread, killing over 170 people so far. The total number of confirmed cases is nearly 8,000. A growing number of countries are evacuating their citizens from Wuhan, where the epidemic first started. A Romanian citizen also requested to be repatriated from the region. Although some experts say the virus is not as dangerous as SARS was, its quick spreading raises concerns, and some of its traits are still unknown.




    BREXIT Britain is leaving the EU on Friday night, after 47 years since joining the bloc in 1973. The Brexit deal was endorsed by the European Parliament on Wednesday, and some formalities are finalised in todays EU Council meeting. The transition will take 11 months, during which the EU and the UK will work to define their new partnership. At midnight on January 31, the British colours will be taken off the EU institutions. At a meeting with members of the British business community in Romania, PM Ludovic Orban said Bucharest supports the negotiations for a future close relationship between the Union and the UK.




    TENNIS The Romanian tennis player Simona Halep was defeated today by Spains Garbine Muguruza (32 WTA) 7-6, 7-5, in the semi-finals of the Australian Open, the first Grand Slam of the year. Halep fails to play a new final in Melbourne, after the one she lost in 2018 to the Danish Caroline Wozniacki. Despite the defeat, as of February 3rd Simona goes up to the second place in the WTA ranking. Halep will also be closer to the top ranked player, the Australian Ashleigh Barty, who also lost in the Australian Open semis. Muguruza will be playing the final against the American Sofia Kenin (15 WTA).


    (translated by: Ana-Maria Popescu)

  • Law against special pensions

    Law against special pensions

    Barely one month into a year marked by local and parliamentary elections, Romanian politicians are competing in initiatives meant to please the general public. On Tuesday, the Chamber of Deputies in Bucharest held a special session in which they passed a bill scrapping the so-called special pensions, with 247 votes in favour against 21 abstentions.



    The clear score however says nothing about the heated debates that preceded the vote. The Liberals, currently in power, and the Social Democrats, who were sent into the opposition at the end of last year, accused each others of being the ones who had introduced such privileges to various professional categories in the first place. The Democratic Union of Ethnic Hungarians in Romania and the Liberal Democrats requested a postponement of the debates, whereas Save Romania Union asked for further restrictions, including a cap on pensions for magistrates.



    The final text of the bill does away with the special pensions paid to MPs, to judges and prosecutors, to court clerks and prosecutors office clerks, to certain categories of civil servants, to diplomats and to Constitutional Court members, and to airline staff. All these categories had so far received pensions that were not based on their previous contributions to pension funds, and which were generally seen as unjustified, unfair and ultimately as a slap in the face of the millions of pensioners struggling to make ends meet.



    However, the special retirement benefits to be paid to former military, police and intelligence service personnel were left untouched, and so were the benefits paid to former athletes, artists, scientists and to members of associations in the creative sector.



    The leader of the Liberal floor group, Florin Roman, said the special pension cuts would cover part of the costs entailed by a planned increase in child allowances and regular pensions. The president of Save Romania Union, Dan Barna, warned that the document contains elements that may be challenged at the Constitutional Court. He suggested instead, although with no success, a number of amendments that kept the special pensions in place for magistrates, but below a specific cap. In turn, the Social Democrats group leader Alfred Simonis, says that in case the court rules the bill unconstitutional, Parliament will operate the required amendments.



    The president of the High Court of Cassation and Justice Alina Corbu warned, shortly after the vote in the Chamber of Deputies, that the bill comes against a previous ruling by the Constitutional Court. She says the special pensions for magistrates are part of a set of guarantees underlying the independence and impartiality of the judiciary.



    Previously, the Judicial Inspection Division and various magistrate associations had also claimed that scrapping their special pensions would be a “brutal violation of the principles of independence and immovability of judges, as defined by the Constitution of Romania and by ECHR rulings.


    (translated by: Ana-Maria Popescu)