Nastase Cabinet is making a wrong move, substantially damaging its credibility to the Romanian economic environments.
Emergency Ordinance 73/1999 on global income tax stays in force, although the Cabinet last week had announced it would modify it, in order to "solve some basic problems" in the new taxation system.
Although the Public Information Ministry on Thursday, March 22 sent a press release presenting the "Emergency Ordinance for modifying and completing Ordinance 73/1999 on income tax," Finance minister Mihai Tanasescu says it is all a "misunderstanding."
"The press got the wrong Ordinance content. The only thing approved is the extension of the deadline for submitting income tax returns by May 31," Mihai Tanasescu says. "As for the rest, Ordinance 73/1999 stays in force," he specified. He also admits "a mistake has been made and the press bureau hurried to go public with it."
According to sources within the governing party, the Cabinet relied on the ordinance not having been published in the Official Gazette yet, thinking no one would notice the attitude change.
Actually, this wrong move outraged the Romanian economic environments. "This is absolutely embarrassing for Nastase Cabinet," Edwin Warmerdam, senior tax manager with consultancy company PricewaterhouseCoopers, maintains.
He says that by acting like this, the Romanian authorities only succeed in proving their incompetence and helplessness in applying the new taxation system which has been worked at for two years and which has already taken up a lot of external funding.
Warmerdam also blames the total lack of communication between the Finance Ministry and taxpayers. The problem is that whereas the trading companies have already started to comply with the new system, trying to observe Ordinance 73, natural persons practically have no idea as to the stipulations in this ordinance, because Finance Ministry's babble only succeeded in confusing everybody.
"There's nothing I can say about such an attitude. The lack of seriousness in the beginning is turning into something else now," says Nicolae Done, fiscal doctrines director with KPMG consultancy.
According to the same sources, the Government dropped the changes to the Ordinance 73, pressured by the IMF, which felt their enforcement would decrease budgetary revenues.
Tanasescu claims the modifications presented by the press were indeed discussed in the Government session, but they "were halted" to be included in a new law draft to be sent to Parliament for debate under an emergency procedure, so that new norms for enforcing the ordinance should be ready by May 31.
Finance minister and PM Adrian Nastase have different views on the matter, though, as the latter had stated the new norms for enforcing the global income tax would come into force no sooner than next year.
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