Public Finance minister Mihai Tanasescu informed President Ion Iliescu during the meeting at the Cotroceni Palace last week that levying an 80% tax on high incomes was not in line with the latest European standards, which go for a cut of the marginal quotas instead of an increase, a ministry release shows.
"Increasing these quotas in Romania would not make much of an impact on the budget revenue collection as to allow for additional social security funding," Tanasescu said.
The minister explained the Northern European states had implemented an excessive taxation system for the high and very high incomes in the early '50s, but had rallied to the trends in the European countries in the meantime.
"Levying lower tax quotas makes it possible to increase the number of taxpayers, which will lead to higher budget revenues, as well as to the allocation of additional funds for the social security programmes," the minister added.
Mihai Tanasescu specified the Government was considering new social security contribution cuts for 2004, as well as the reduction of other taxes depending on the results of the analyses and studies conducted by the Public Finance Ministry.
"I have also informed the President of Romania that we are not planning on modifying the VAT, profit or income tax quotas for this year, in order not to upset the business environment and decrease budget revenues," Tanasescu added.
The release also shows it was minister Mihai Tanasescu that requested the meeting with President Iliescu. The purpose of the meeting was to brief the President on the current stage of fiscal reform, the measures considered by the Government to actually achieve reform in Romania, as well as the progress of negotiations with the International Monetary Fund. President Ion Iliescu on Thursday night had said in the "State of the nation" TV show broadcast by the public TV network that the tax on the high salaries should go up to 80%, feeling this would not impact on the lifestyle of those falling into this category.
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