Every household in Romania is to get its very own tax consultant, provided for free by the Romanian state. Liviu Dragnea, leader of the ruling PSD, announced yesterday that the government intends to hire no fewer that 35,000 of these tax consultants, paying them a more than healthy monthly wage of 10,000 lei (around €2200), at a total cost to the state budget of almost one billion euros per year.
By comparison, there are an estimated 11,000 family doctors in Romania. The sick will soon be far more likely to get an appointment with their tax consultant than with their GP.
Dragnea claims that the tax consultants will be needed to help Romanians (and the rest of us who live here) with their tax returns from next year onwards. Viorel Stefan, the Minister of Finance, yesterday revealed a major shake up of the taxation system, which would see households – and not individuals – taxed. The flat rate of tax would remain, but would be reduced from 16 per cent to just 10 per cent (the same as Bulgaria), and anyone earning less than 2000 lei per month would pay no tax at all, at least on their salary earnings. The stated aim of the changes is to improve tax collection efficiency, increase the amount collected and reduce the size of the grey and black economies. The unstated (and perhaps real) aims are to bring more people into the tax system, and to allow the government to finally get its hands on the billions of euros sent home every year by Romanians working abroad.
Minster for European Funds and Ana Pauker look-a-like Rovana Plumb – who was also rolled out yesterday to launch the new policy – went so far as to suggest it could give the Romanian tourist industry a boost. ‘Holidays in Romania will be deductible household expenses,’ she said. ‘Holidays abroad will not.’ Why not just stick the Iron Curtain back up and prevent people from travelling abroad? Think of the boost Romanian tourism would get then.
While Stefan estimates an increase of two per cent in the amount of tax collected, the end result of course will be the exact opposite of the desired outcome: households the world over have a habit of hiding any wealth in the sofa the moment anyone from the tax office gets within shooting distance. And in a country where many remember a time (not so long ago) when state interference in the lives of ordinary people was all-encompassing, few households will be laying out the welcome mat to an unwanted tax consultant. Indeed, the whole thing reeks of the Bolshevik tendency to send requisitioning squads into the villages to seek out and seize hidden grain. They should expect resistance.
That’s if it all happens of course. A powerful faction in the PSD – led, bless, by Victor Ponta and former Finance Minister Eugen Teodorovici – is unhappy with the idea.
In a separate (but not unrelated) outburst yesterday, Dragnea launched an attack on NN (a division of ING). The Dutch insurer earlier this week sent worrying emails to its 300,000 customers stating that the government was possibly planning to nationalise (read: confiscate) almost €7 billion in private pensions. The government needs the money to cover the enormous holes in its budget, caused primarily by the enormous increases in salaries of state employees (up to 150 per cent in some cases). Dragnea accused NN of acting like ‘a colonial power’, saying that they would not dare to send such an email to their Dutch customers.
No, probably not, but that’s because the Dutch government doesn’t nationalise pensions.
Update: The government (via the Financial Supervisory Authority; ASF) fined NN 750,000 lei today (the highest fine in the ASF’s history) for the crime of ‘damaging trust in the pension market.’ NN’s boss Raluca Tintoiu has also been stripped of her right to be a general manager of a financial company. The ASF has also fined BCR 100,000 lei and is investigating its boss, Radu Craciun. Make no mistake: these are troubled times, especially for foreign investors.