Three months before the start of a new fiscal year, the Finance Ministry is preparing to see through completion of all the attempts by the former minister to eliminate provisions in the Fiscal Code that can be seen to favour certain taxpayer categories, at the same time as aligning income tax on various streams of income to the 16% rate.
"You will find out about our plans for 2006 in a matter of days. There will be some steps that were considered very funny back in Minister Remet''s days, such as the seat tax for restaurants. I know some business people will hate them," Finance Minister Sebastian Vladescu said yesterday.
Speaking about the frequently mentioned fiscal strategy, he called for a "time-out", saying he needed more time to set a fiscal programme for the next three to five years, which would therefore be completed in 2006.
Vladescu mentioned again the "guerrilla war" on tax evaders, explaining he could not concentrate on the fiscal programme before this particular problem had been dealt with. He promised changes to the Fiscal Code that "some in the business community will hate." He also dismissed the comments of a businessman about the too high level of taxation, arguing, "The fiscal system in Romania is one of the most permissive in Europe, tax-wise."
The intentions to prop up the budget in order to sustain the promised cut to social security contributions by two percent will target several taxpayer categories. Restaurant owners are to be required to pay a special annual tax, depending on the area and type of their business.
This is followed by programmers in the IT sector, who will no longer enjoy tax exemption on their salary. This incentive was introduced in 2001 to stimulate business in the IT industry, and was aimed at employees with degrees in Automation, Computer Science, Cybernetics, Mathematics and Electronics, as certified by a diploma issued by an accredited university, which make at least 10,000 dollars a year from software development.
Another taxpayer category in the sights of the fiscal authorities is made up of people with higher than average incomes. In addition, the taxable value of a building that exceeds 100 square metres will be increased by 10% for every additional 100 square metres or fraction of every additional 100 square metres. Vehicle tax will also be increased in line with engine capacity, by multiplying each 200 cubic centimetre group by 10 to 60 RON, with tax for capacities over 3,000 cubic centimetres tripling to at least 150 RON a year. Yacht owners will pay an annual tax of 5,000 RON, up from the current 1,800 RON.
As for Stock Exchange investors, the Finance Ministry has announced its plans to levy a 16% tax on gains made during the year from each transaction with shares, while mentioning the possibility to do this at the end of the year by applying the 16% to the entire net gain of the portfolio.
Another effort to make extra money for the fiscal authorities could cause Romanians to want to avoid inheriting anything, because of the tax that will be due, as is the case in the West, such as in France. Gains made from transfers of real estate acquired by inheritance or exchange, currently still tax exempt, should see a levy of 16%.
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