Constitutional Court slams bill taxing special pensions

The Constitutional Court of Romania dismissed a bill on the taxation of what Romanians call “special pensions

Ştefan Stoica, 16.12.2020, 13:50

As the name suggests, Romanias special pensions are set under special laws. They were originally granted to magistrates and force structures. Later on, lawmakers decided that there are more eligible recipients, including MPs themselves, diplomats and aviation staff.

Unlike regular pension benefits, special pensions are not—or not only—based on lifetime contributions to pension funds. They are funded both from the social security budget, and from the state budget.

This, as well as their often inflated amounts, in the thousands of euros, make special pensions, or rather their beneficiaries, the target of criticism from regular citizens, whose pensions are based on active lifetime contributions and average at around 300 euros per month.

Politicians listened to the people and this summer drafted a bill levying 85% taxes on the special pensions in excess of 1,400 euros, including those received by magistrates, the military and the police.

The bill did not eliminate the concept of special pensions, but rather reduced the benefits paid as such. But the Constitutional Court dismissed the law, ruling that it was unconstitutional as a whole.

The bill adopted by Parliament in June had been challenged by the Ombudsman and the by the countrys highest court, according to which the draft legislation came against the principle of fiscal equity. The High Court and the Ombudsman claimed the special pensions set by special laws are subject to double taxation, which comes against the principle of non-discrimination and fair tax burdens, while also breaching the independence of magistrates and the principle of legislative predictability.

The Constitutional Court, which had deferred a ruling on the case several times, is yet to make public its reasons for dismissing the bill.

A number of Constitutional Court rulings of late have fueled speculations that, in its current configuration, the Court is politically biased, ruling in favour of the Left. With the special pensions bill, the Court has an additional moral dilemma, noticed by everyone: constitutional judges are themselves receiving such pension benefits.

And the saga of this law includes another relevant episode: in the last plenary sitting of the Chamber of Deputies, before the elections, all MPs from the Save Romania Union resigned in order to not be eligible for special pensions. So did 6 Social Democrats, including the party president Marcel Ciolacu. While the decision of Save Romania Union is credible, as the party had constantly lobbied against special pensions, the Social Democrats are the champions of legislation that favours MPs, giving their opponents reason to claim the move was populist and driven by electoral goals. (tr. A.M. Popescu)