Radio România Internațional

Tag: turnover

  • State budget without new taxes

    State budget without new taxes

    Romania’s ruling coalition, made up of the Social Democratic
    Party, the National Liberal Party and the Democratic Union of Ethnic Hungarians
    in Romania (UDMR), is to submit the draft budget law for 2022 to Parliament by December
    20, for discussion and endorsement. The 3 parties intend to have the
    fiscal-budgetary strategy passed by Christmas.


    The law
    must provide funding for investments, the increase of public pensions and
    allowances, while at the same time keeping the budget deficit under control.


    The idea of
    introducing new taxes has triggered debates in the new ruling coalition. The Liberals
    once again emphasised that next year’s budget will not be based on new taxes. However,
    the Social Democrats and UDMR sought to levy an additional 1% of turnover tax
    on companies with turnover in excess of 100 million euro. According to UDMR,
    the money would cover healthcare and education investment needs, but the
    business community voiced discontent with the measure.


    The Liberal
    president Florin Cîţu mentioned that these companies paid taxes in advance last
    April, when the economy was shut down, and argued that it is not fair for the
    same businesses to be penalised.


    In turn, PM
    Nicolae Ciucă promised there will be no such taxes. This is precisely what we
    pledged in the governing platform, namely that no such tax will be levied this
    year. The governing plan was endorsed by Parliament and it will be applied as
    such,ˮ Nicolae Ciucă pointed out.


    The finance
    minister Adrian Câciu said in turn that the budget will not include new taxes,
    and that any change in the tax system will be predictable and operated after talks
    with private businesses. He said Romania needs solidarity now, to protect
    low-income citizens from price rises, especially in the energy sector. We will
    achieve this by stimulating the economy and encouraging the companies that
    produce in Romania, regardless of their ownership, because all that is produced
    in Romania is produced by Romanian employees. A product made in Romania means
    jobs for Romanians. By supporting Romanian producers, we provide guarantees that
    hundreds of thousands of people will have stable, safe jobs, the finance
    minister Adrian Câciu explained.


    In turn,
    the Social Democratic leader Marcel Ciolacu said that should the coalition
    decide to introduce a new tax, this will not take effect sooner than in 6
    months’ time. On the other hand, he said the country has major problems in
    terms of tax evasion and VAT collection. Romania is estimated to have tax
    evasion accounting for 10% of GDP at the moment. Moreover, 34% of the VAT owed
    is not collected,ˮ Marcel Ciolacu warned. (tr. A.M. Popescu)

  • Talks on “solidarity tax”

    Talks on “solidarity tax”


    Romanias coalition government faces significant budgetary strain, after having committed to raise minimum wages, public pensions and child allowances as of January 1.



    These days the 2022 budget is being outlined, and a means to increase revenues would be to levy a solidarity tax on big companies. The idea came from the most junior member of the ruling coalition, the Democratic Union of Ethnic Hungarians in Romania. Its president, deputy PM Kelemen Hunor, said the proposed 1% of turnover will go into investments in priority fields such as healthcare and education.



    “It is a short-term proposal, for one year, in order to increase revenues to the budget at a difficult time, when inflation and the rising energy prices force us to bring additional funding to the budget so as to help the people who need assistance,” Hunor explained. He added that in difficult periods, companies must show solidarity towards the people and the society from which they derive their profits.



    The Social Democrats back the idea, but the Liberals are reluctant. The targeted private or public companies are the ones with turnover above 100 million euros.



    The matter will be discussed with the business community, which has already responded with little pleasure to the rumours of overtaxing. The American Chamber of Commerce in Romania, representing over 470 American, Romanian and multinational companies, voiced concern with the governments plans to increase the tax burden on big companies in Romania, at a time when investments and businesses are already affected by multiple crises.



    After an extended political crisis during which companies confidence in the Romanian business environment plummeted, concurrently with the Covid crisis, the energy crunch and deepening tensions in the labour market, the news of new taxes can only increase the risk of companies turning somewhere else for their investments and expansion plans, AmCham warned.



    According to its officials, the lack of predictability and deepening instability entailed by rushed measures discourage investments and businesses plans for the Romanian market, and the medium and long-term negative impact will overshadow the short-term gains.



    According to economic media, over 300 Romanian and foreign companies operating in the country may be affected by the 1% “solidarity tax”, and figures indicate that this way the government may collect an additional 1 billion euros to the state budget.



    In turn, the Foreign Investors Council also wants the measure dropped, arguing that it punishes precisely those companies that comply with fiscal regulations and have managed to perform properly under restrictive Covid-related circumstances. (tr. A.M. Popescu)


  • Talks on Energy Prices

    Talks on Energy Prices

    The Romanian authorities from the
    field of energy regulation have held talks with European Commission officials
    in Brussels. This round of talks comes after in March, this EU body sanctioned
    Romania for having violated legislation in the field of gas distribution. How
    was this situation possible?






    Zoltan Nagy, Vice-president of the
    Romanian Energy Regulatory Authority, ANRE, said during a conference on energy,
    that when the energy market was liberalized in 2017, the mechanisms in place
    weren’t mature enough so the Romanian gas market wasn’t completely ready for liberalization.






    This was the reason for which in
    December 2018, the Romanian government made the decision to cap the price for domestic
    energy production for a while. According to the ANRE official, all surveys
    conducted at that time showed that there was no point for Bucharest to continue
    the timetable agreed upon with the European Commission because we would have
    faced a weird situation in which the imported gas had become cheaper than the
    timetable prices. However, gas price doubled over a period of one year and a
    half and because the European Commission does not agree with the idea of
    protecting household consumption, an infringement procedure was initiated
    against Romania in March, as the country was infringing upon the European
    legislation in the field. Zoltan Nagy has admitted there are incompatibilities
    between the natural gas directive and the EU treaty.






    Zoltan Nagy: There is a
    legal framework for temporary measures at the level of member countries, which
    are aimed at protecting certain categories of consumers. The fact that in our
    country this protection is granted to all household consumers might not be
    entirely right, but our talks with the European Commission have reached a
    certain level and after renouncing these temporary measures, we could have a
    genuinely-liberalized market.






    The ANRE Vice-president has also
    added that measures must be taken in order to protect the vulnerable consumers
    from fluctuations in gas or electricity prices. Most household consumers do not
    need protection at this time and those really vulnerable aren’t protected
    enough, Zoltan Nagy has also explained. According to him transaction mechanisms
    on the wholesale market are also important and ANRE is working on these issues right
    now.








    As for the 2% contribution from the
    energy producers’ turnover, which will go directly into the institution’s
    budget, ANRE proposed amendments to its own functioning regulations so that
    after the regulator has covered all its administrative expenses, the surplus
    will be used in energy-efficiency projects all the more so as Romania is also
    under infringement in terms of the rehabilitation of the collective residential
    buildings.




    (translated by bill)