THE FIRST MEASURE AFTER THE ELECTIONS The governments greenlights the tax increases

ALEXANDRU SÂRBU (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section / 13 decembrie 2012

The governments greenlights the tax increases

In yesterday's meeting, the Government has approved the emergency ordinance which allows the updating of local taxes to match the inflation rate. As a result, the local authorities are allowed to raise the taxes which fall within their area of competence, as well as taxes similar to the above and the applicable fines, by 16.05%, government spokesman Andrei Zaharescu said.

The decision, which will apply starting in January 1st, 2013, would generate an increase of local revenues by 527.73 million lei, he said.

Thus, next year, taxes for buildings, land, vehicles, shows, for the issue of certificates and authorizations, and the fee for the drivers' license tests may be raised, as well as the fines levied by the local authorities.

Prime Minister Victor Ponta yesterday said that the decision will not be published until it is understood that the government is not the one raising the local taxes, the only ones who can do the indexing to the inflation rate are the local authorities, if they want to. "Today in the government meeting, the decision promoted by the Ungureanu government was brought up again. That decision allows according to the law, according to all the laws concerning the public finances, - Local Council, General Council of the City of Bucharest - to update the local taxes with the inflation. However, it does not require them to do so", he said.

The prime-minister considers that prior to the publication of the Government Decision, it needs to be "very clear" that the Government does not require the hike of the local taxes, it merely allows them to update them to match the inflation rate, if they consider this action be necessary and useful. "The local taxes won't be raised, no local tax will, and it won't be the Government doing in this any manner whatsoever", said Victor Ponta.

The government informs the local authorities about the aggregated rate of inflation over the last three years, with 20% subtracted or added to it, according to the law, he explained. "In other words they can cut taxes by 4%, or they can raise them by 16 plus 20, in other words a maximum of 36%. The government doesn't interfere in local public finances, that is for the local councilmen to decide", the prime minister said.

The minister of administration and internal affairs, Mircea Duşa, also said that the government did not raise the local taxes, it has just updated the minimum and maximum limits, and they are set by the local councils, and he said that the taxes would be "decent". He said: "According to the Fiscal Code and to the law concerning local taxes, the government must update the minimum and maximum limits in for the local taxes every three years, according to the inflation rate. The ability to set local taxes lies with the local councils. Within these limits, the councils can even reduce taxes, because the Tax Code stipulates that these taxes can be lower by as much as 20%".

In October, The Ministry of Public Finances (MFP) published a draft decision concerning the updating of the local taxes with the inflation rate over the last three years, meaning their increase by 16.05%, for the most part bringing back the stipulations of a draft ordinance published by the Ministry in March, but which never got to be approved by the Government.

Prime Minister Victor Ponta subsequently said that the decision on whether or not to raise taxes and fines by 16%, in relation to the inflation rate for the 2010-2012 period lies with the mayors, and he was annoyed that the officials of the Ministry of Public Finances never consulted with him on this draft and did not explain more clearly what it involves.

At the time, the Ministry of Finance took down the draft from its website, saying that the current prognosis concerning the average inflation rate for this year, which needs to be used for setting the indexing ratio, is lower than the one taken into consideration when quantifying the fiscal impact at the time the quantitative analysis was performed, meaning that the impact review needs to be done again, and be discussed again with the international financial institutions upon the next consultations with them.

According to another decision approved in yesterday's meeting, the government will not offer meal, gift or holiday tickets to public sector employees next year either, and it will continue to withhold the reparations for a certain category of revolutionaries, will limit the gratuities on the railway sectors and the hirings in the public sector will remain frozen.

These rights haven't been granted since 2009, and the current gov1 intends to freeze the payments nex1 year as well, according to an emergency draft ordinance elaborated by the Ministry of Public Finances.


Diesel fuel excises will increase by 17 Euros/ton

Tax warehouses for alcohol, tobacco and energy products, allowed again

The Diesel oil excises will be raised in the beginning of 2013, to 391 Euros/ton, from its current level of 374 Euros/ton, according to a draft emergency ordinance, to amend and complete the Tax Code. The price for 1,000 liters of Diesel Oil is set to increase to 330.395 Euros, from 316.03 Euros, the draft says. The passing of this measure would ensure the compliance wit the commitments which Romania has made in its position of the European Union, and would avoid the risk of a new infringement proceeding being launched against Romania, the argumentation note explains.

The document also stipulates that fiscal warehouses will be allowed for the storage of ethylic alcohol and alcoholic beverages, as well as the elimination of restrictions concerning the storage of energy products and processed tobacco products. The amendments to this project ensure the compatibility with the EU law when it comes to the two infringement proceedings, which creates the premise for them to be dropped.

In 2010, the Government has adopted an emergency ordinance for combating tax evasion, which stipulated, among other things, the improvement of the prevention and fighting of tax evasion with excisable products, raising revenues to the state budget by implementing the obligation to pay excises upon receiving products from other EU member states, the elimination of direct exemptions and the elimination of storage fiscal warehouses. As a result of the elimination of fiscal warehouses for ethylic alcohol and alcoholic beverages, as well as the restrictions on the authorization of fiscal warehouses for energy products and processed tobacco products, the European Commission launched two infringement proceedings against Romania, for failing to meet the obligations it has as a member of the EU.

When it comes to the elimination of the warehouses of warehouses for alcohol and tobacco products, the European Commission could send in at any time the justifications for the request to comply within a certain delay, which usually is two months from the sending of the letter, according to the note of argumentation.

As to what concerns the restriction of fiscal warehouses for energy products, Romania has until December 27th 2012 to send to the Commission the argumentation notice concerning the compliance measures, the government informs. In the event of the failure to meet this obligation, the European Commission could notify the Court of Justice of the European Union (CJUE), starting off the administrative procedure of the action taken against our country.

In the event the Court of Justice of the European Union will sentence Romania for failing to meet its obligations, and if it doesn't comply right away, the Commission could acknowledge the failure to comply with a ruling. In this case, the European Commission could propose sanctions, consisting of a minimum fixed lump sum, of 1.71 million Euros, and penalties for the days of delay, since the moment the ruling of the Court of Justice of the European Union was announced, which can range from 2,105 Euros/day and 126,336 Euros/day.

The draft ordinance also stipulates the introduction of the conditions for the operation of tax warehouses, intended exclusively for the storage of excisable products. The tax warehouse authorizations are expected to have a 3-year validity. In the event of authorized warehouses which have been authorized for just one year, the validity of those authorizations will be automatically extended by two years.

The deadline for the payment of excises by the registered recipients is expected to be the 25th included of the month following that where the excises become payable, like it happened in the past. Energy products such as diesel oil, gas, kerosene and liquefied oil gas, received by the registered recipients excise-free, will be allowed to leave the warehouse only if they confirm the payment to the state budget of the excises for the quantity which will be invoiced, according to the draft of the emergency ordinance. (A.S.)