The reduction of profit tax to 18%; a 4% cut to social security contributions; and the introduction of a 14-15% flat tax rate for the income of natural persons. These are the main tax cutting requests formulated by the most powerful association of businesspeople, the Alliance of Romanian Employers' Confederations (ACPR).
According to these representatives of the business community, an imbalance has occurred in the relations between the Government, the trade unions and the employers' associations. It is a situation that employers are trying to remedy by closing ranks and establishing the above-mentioned alliance.
"After 1992, numerous employers' organisations were established, but they have proved incapable of managing and promoting the interests of businessmen. Perhaps that is why we now have a Fiscal Code conceived by the Government and a Labour Code drafted by the trade unions," George Copos, chairman of the ACPR said yesterday.
In his turn, Florin Pogonaru, chairman of the Romanian Businesspersons Association (AOAR), a member of the ACPR, stated that the lack of balance between labour and capital representation is also apparent when it comes to Parliament. "For instance, trade union members can be elected in Parliament, but employers are not allowed to do the same," Pogonaru explained.
As for taxation, the AOAR chairman feels that Romania enforces labour taxes at record-high levels, whereas the level of social security contributions is "a disgrace."
The need to reduce taxes was also outlined by Dinu Patriciu, chairman of the European Business Environment Initiative (IEMA), also a member of ACPR.
"Any Government that takes power will have to speed up the European Union accession procedures. Romania has the potential to reach 10% annual economic growth, but only if brave steps are taken, including a reduction in taxation," Patriciu stated. At this stage, Romania's taxes should be considerably smaller than those in neighbouring countries, Patriciu added.
Finance Minister Mihai Tanasescu recently announced that profit tax would go down next year, from 25% to 19%, while social security contributions would be cut from 49.5% to 47.5%. Furthermore, the minimum taxation quota for the income of natural persons will drop from 18% to 14% and the maximum quota will go down two points, to 38%. The intermediary income tax brackets will be eliminated, except for the 26% rate.
Gilbert Wood, president of the Foreign Investors Council (FIC) - the association of major foreign businesspeople, which totals investments in excess of seven billion dollars, has said he supports the establishment of the ACPR. Moreover, he hopes that the Alliance will be able to balance dialogue between the three parties, helping the trade unions and the Government to learn the basics of a market economy.
miruna.lebedencu@zf.ro
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