Difficult week for Bolojan: Government assumes responsibility for Package 2

The government is expected, during this week, to assume responsibility in Parliament for the second package of reforms and fiscal measures, as recently declared by Prime Minister Ilie Bolojan.

According to information presented last week by members of the Executive, the second package of measures includes both structural reforms and fiscal adjustments, targeting special pensions for magistrates, public administration, health, insolvency and the fiscal regime, in a declared attempt to bring more equity, efficiency and budgetary discipline.

The reform of magistrates' pensions is, without a doubt, one of the most anticipated and contested changes, because it targets a previously privileged social segment, with pensions considerably higher than the national average. The new law establishes that magistrates will only be able to retire at the standard age provided for by the public system, and the amount of the pension will be capped at 70% of the net income from the last month of activity. In addition, the calculation basis will be represented by the average of gross allowances and bonuses from the last 60 months, which drastically limits the possibility of artificially increasing the pension through exceptional income obtained at the end of the career.

The public administration reform comes with radical measures to reduce the bureaucratic apparatus, aiming to eliminate about 40,000 positions, especially at the level of city halls and county councils, but also to limit the number of local police officers, restructure the offices of dignitaries and introduce stricter rules in the management of public revenues and expenditures. Fiscal secrecy on debts to the state disappears, city halls will be able to condition authorizations and services on the payment of outstanding taxes, and road traffic will be directly linked to the financial discipline of drivers, with the license being suspended for those who do not pay their fines within 90 days.

The health reform proposes the introduction of a performance-based salary mechanism and the financing of hospitals strictly according to the cases treated, a change intended to discourage fictitious hospitalizations and bring added efficiency in the management of public money.

In parallel, the amendments to the Insolvency Law attempt to block abuses and increase the degree of recovery of debts to the state, by accelerating procedures and by prohibiting administrators of insolvent companies from founding other companies for five years.

The second package also contains a series of fiscal measures with a direct impact on the business environment and citizens. Thus, multinationals with businesses of over 50 million euros will no longer pay the minimum tax on turnover, but a tax on affiliates, and the deductible expenses of these companies will be capped at 3%, with everything exceeding this ceiling being taxed at 16%. At the same time, a tax of 25 lei will be introduced for each extra-EU parcel whose value is below 150 euros, and the health contribution for liberal professions and other individuals who earn income from independent activities will be based on an increased ceiling of 90 gross minimum wages.

Among the fiscal measures in this second package are the increase in tax rates for gains obtained from stock market transactions, to 2% and 4%, depending on the period of time in which the securities were held, and the increase in the share capital for companies, to 8,000 lei. At the same time, based on a draft law initiated by the General Secretariat of the Government, a project that is part of package 2, the number of members of the boards of directors of companies with majority state capital will be reduced and the related allowances will be reduced. All these measures constitute a tough strategy, aimed at disciplining spending, reducing privileges, increasing the level of budget revenue collection and making both citizens and the business environment accountable.

The AUR representatives announced that, after the government assumes responsibility, it will initiate a new motion of censure in light of the social dissatisfaction that is present every day regarding the tough measures imposed by the current government coalition PNL-PSD-USR-UDMR-National Minorities Group in the Chamber of Deputies. In order for the motion of censure to lead to the dismissal of the Government, 233 votes in favor are needed. If the motion of censure is accepted, the Bolojan government is dismissed, and the second package is considered rejected by Parliament.

If the Government passes this motion as well, as happened in July, after assuming the first package of fiscal measures, the parliamentary opposition has only one solution: to challenge the second package of fiscal measures at the Constitutional Court. If the CCR rejects the challenge, the second package of fiscal measures will go to President Nicuşor Dan for promulgation.