We are at a time when we have to make fundamental decisions about modernizing a fiscal framework that, as all the data show, no longer meets the challenges of the times in which we live. Theoretically, we have a single rate of income taxation, but the reality is that we actually have a tax system in which we operate with many different rates. We have 1% income tax. We also have 1% on the income of micro-enterprises, but a share of 3% in the case of those without employees. Then we have a 5% dividend tax. And finally, there is the 10% so-called general income tax rate. But, in addition to these examples, there were countless other exceptions, so we ended up charging only 1% of gambling winnings up to the limit of 66 thousand lei!
In fact, the cruel truth is that, for a long time, the single tax rate has become an empty form of its natural content. He turned into a mutant who generated a chaotic set of exemptions, derogations and other such tax subterfuges. Thus, a perverse and discriminatory mechanism was born, which favors the one who earns a lot towards the exceptional, while the ordinary employee, who lives from work, is charged monthly with over 45% of the salary.
The Romanian tax system came to resemble the papal indulgences of the Middle Ages
Basically, the Romanian tax system came to resemble rather the way the Pope sold indulgences in the Middle Ages! Those who had greater persuasive power in a given government received tax indulgences. Those who do not, especially those with low and medium wages, are condemned to pay a labor tax rate that has become increasingly difficult to bear.
This is the reality on the basis of which PSD proposed to the other governing partners, since the end of last year, a sincere debate on the new principles and values that should be the basis for the modernization of the fiscal system. Especially in recent months, it has been found that the need to reform the fiscal framework is not a fad for PSD. Here is a relevant quote: “Measures should include an ambitious tax reform to ensure that everyone pays their share fairly.” It’s not a phrase written by a PSD economist or any other leftist, although it may sound like it! He says it even the mission of the International Monetary Fund in Romania and I think that no one suspects the IMF experts of affinities with social democracy …
Here is what a former head of the Fiscal Council, who has not spared the PSD at all over time, says: “Today’s regressive taxation system must be fined. Many high and very high incomes have lower taxes than wages! ” It is literally what PSD supports today! Exactly because of these anomalies between the highest incomes and the lowest incomes in Romania, PSD considers that the new fiscal model must be based on the principles of SOLIDARITY and EQUITY between taxpayers.
And I want to give just a few concrete examples of social and fiscal inequity:
– it is unfair that in this period of rising food and energy prices those who have oversized incomes should enjoy the same tax regime as those struggling in severe poverty;
– it is unfair that a Romanian DIY company pays profit tax of more than 3% of turnover, while a multinational DIY company pays less than 0.5% of turnover;
– it is unfair to pay for an apartment of 100 square meters in Primaverii, which is worth almost one million euros, the same tax as a block of flats in New Bucharest, which has a value almost ten times lower!
And inequality is a symptom of much bigger problems, because the use of an outdated and regressive tax system has not allowed us adequate investments to provide equal opportunities for families in this country to benefit from basic social services such as education and health.
But it is even more than that! The initiative to reform our outdated tax collection system is not strictly about taxation. In PSD’s view, the reform of the fiscal framework is a tool that must contribute to stronger economic growth, job creation and greater income equality. The new fiscal model must support the continuation of ECONOMIC STIMULATION measures to generate development and increase living standards.
Our current tax system is dysfunctional, outdated and totally inadequate. If we want to develop our potential, we need a tax system that will advance us and build for the future and that will not be blocked in the status quo from which we lose alland. We can’t live in the past! We cannot overcome the current economic challenges by maintaining the most unequal and unfair tax system in the EU! Something needs to change, because doing the same thing over and over again and waiting for different results is actually the definition of madness.
PSD proposed several concrete measures to the coalition partners for the modernization of the Fiscal Code. Most of them were accepted and I am glad that we also agreed on the idea of deductions for employees at the minimum wage. We will continue to fight for the principles and values we believe in, even at the risk of disturbing certain political leaders.
We believe in SOLIDARITY! This means that those who earn a lot contribute more to the budget to support those who are vulnerable to inflation. And Solidarity must be applied between employees and employers! A fair balance is needed between the taxation of income from employees and the income of employers from capital.
We believe in SOCIAL EQUITY! We believe that the fiscal regime must be established according to the possibility of each one to contribute to the state budget. That is why we have proposed the system of deductions for those with low incomes and that is why we want overtaxation for those with oversized incomes and large fortunes – expensive villas, limousines, boats and other luxury items.
We believe in the need for a PARTNERSHIP with the big companies that make good money in Romania, through which they can show solidarity in these difficult times, in order to support the essential systems in our country, namely Health and Education. The ultimate goal is obviously the introduction of a progressive taxation system, but we know that this cannot be done overnight, but is an objective that must be synchronized with the process of digitization of the Tax Office. But our goal is not to raise taxes, but to create a fairer, more balanced and modern economy.
This is our vision for a tax system that offers equal opportunities and equity for Romanians and keeps us safe, secure and competitive abroad. We aim to minimize economic disruption, maximize income equality, improve people’s quality of life. And I don’t think that’s a big word, but a modern tax system is also a huge chance to have better control over our destiny as a state.
#vital #modernize #tax #system