Stock market investments discouraged? 10% tax on gains, agreed by pro-European parties

The increase from 1% and 3% to 10% of the tax on gains from stock market transactions would be one of the 100 measures agreed upon by the PSD, PNL, USR and UDMR negotiators during the discussions at the Cotroceni Palace, according to a document that circulated in the media, a document that, however, according to some prominent members of the respective parties has not yet been approved by the leadership of the respective formations. According to the document presented in the media, after more than a month of debates, the representatives of these parties would have reached an agreement on most of the proposals, which include the introduction of new taxes and duties, as well as the increase of others. It seems that investors at the Bucharest Stock Exchange will not only be affected by the increase in the tax on transactions, but also by the increase in the tax on dividends. Thus, starting with January 1, 2024, the dividend tax has already increased from 8% to 10%, and following new negotiations it could reach 16%, according to the proposal advanced by the parties that will form the future Government.

Read Adrian-Felician Cozma: "The supertaxation of stock market transactions will not be good for the economy”

Read Florin Jianu: "Before introducing new taxes, we need to reduce spending”

Read Marcel Murgoci, Estinvest: "Active investors will be more affected by the increase in the tax on capital gains to 10%"

All these proposals included in a table with the 100 negotiated measures, have not yet been assumed by the pro-European parties, although several representatives admit that a significant part of the measures reflected in the table were approved in the presented form.

A problematic aspect is the fact that the respective measures were agreed without individual impact studies, without an analysis of the degree of affordability on the part of the business environment or the population. In particular, the introduction of a tax on all banking transactions is mentioned as "being agreed by all parties”, but without clarifications regarding its application - whether it will be per transaction or proportional to the value.

The BURSA newspaper reported on this possible measure in an article published 10 days ago, entitled "How to finance incompetence and corruption? We increase taxes”.

Read How to finance incompetence and corruption? We raise taxes

The need for an impact study becomes evident in the context in which one of the measures proposes the elimination of cash payments, promoting exclusively the use of cards. However, the reality in Romania indicates a low degree of banking. A study conducted last year by the Romanian Institute for Evaluation and Strategy, commissioned by the Romanian Association of Banks, shows that 4.4 million Romanians do not have a bank account. Many of them pay their bills in cash, receive their salaries or pensions in cash and do not use banking services.

The data is also confirmed by the European PULSE project, which indicates that Romania is in the top 15 countries with the highest share of the unbanked population - approximately 40%, equivalent to almost 7 million people. This reality places Romania alongside countries such as Kenya or Kazakhstan in terms of financial inclusion.

All these data suggest that the proposed fiscal and reform measures are not based on rigorous empirical analyses and do not take into account the economic and social impact on different categories of the population. Their subsequent adoption in an accelerated and non-transparent manner may generate unnecessary imbalances and tensions.

Read Ionel Uleia, Prime Transaction: "Increasing the capital gains tax to 10%, without allowing for the offset of losses, would strongly discourage stock market investments"

Read Antonio Oroian, Goldring: "Increasing capital gains tax may generate short-term profit markups"

Read Claudiu Năsui: "We agree with the increase in the tax on stock market transactions, but on a different system”

The conclusion that must be drawn is that many of these measures seem to have been formulated in a hasty manner, without a solid substantiation and without a clear assumption by the parties involved. The significant increase in taxes on stock market gains and dividends, as well as the introduction of a possible tax on banking transactions, would directly affect both investors and ordinary citizens. The proposal to eliminate cash payments, in a context in which millions of Romanians do not have access to banking services, accentuates the distance between decision-makers and the economic reality of the population.

The lack of public commitment to the document presented by the media, along with the contradictory statements of political actors, amplifies the perception of improvisation and lack of institutional responsibility. In this context, it is essential that a future responsible government develops public policies based on concrete data, open dialogue with civil society and consultation with the economic environment - not on hasty, potentially destabilizing accounting measures.

More details on these topics can be found in today's edition of the BURSA newspaper.