Proposed Changes to the Fiscal Code

The Romanian Finance Minister Eugen Teodorovici announces major changes in the Fiscal Code in 2019

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Ştefan Stoica, 19.12.2018, 13:19

One of the taxation novelties announced on
Tuesday by the Finance Minister Eugen Teodorovici is a cap on natural gas
prices for 3 years and making the contribution to privately managed pension
funds optional. This means that the people who have contributed for at least 5
years will now be able to withdraw their funds from the so-called Pension
Pillar 2, if they choose to, in exchange for a withdrawal fee. The
administration fee for Pillar 2 funds will also be lowered as of next year.

Of the fiscal and budgetary provisions
announced by Minister Teodorovici, the most controversial is the proposed
introduction, as of January 1, 2019, of a so-called tax on greed to be levied
on banks in case the ROBOR rate, which is the reference indicator in
calculating interest rates on loans, exceed a specific threshold. The impact of
this measure is estimated to range between a rough 700 million euro and zero,
if banks keep the ROBOR indicator below the reference level of 1.5%.

What are the arguments in favour of such a
measure, and why this deprecating name? The Finance Minister says the new tax
should be rightfully called a tax on greed, insofar as it is designed to
protect the interests of Romanian citizens when banks choose to acquire
government bonds, which are safe for them, rather than give out loans and thus
finance real economy. Romania, Teodorovici explained, has the second-highest government
bond exposure in the European Union. Also, profit margins in Romania are quite
attractive, among the highest in the EU, while bad debts are often transferred
to companies in the same holding and sold for much more than the price paid for
making them. So, Teodorovici went on to say, I always hear that banks are
trustworthy partners and loyal to the economy. But I will only believe that
when they understand that both partners must stand to gain, that is both the
bank providing the funding, and the operators who get the loans.

The National Bank’s strategy adviser Adrian
Vasilescu quickly responded. I don’t get this tax on greed; deeper
philosophical reflection is required, because I don’t know whose greed we are
talking about. According to Vasilescu, the ROBOR rate is linked to the country
as a whole, to its economy and, first and foremost, to inflation. As such, we
cannot accuse banks of being greedy when they increase this rate because of
irregularities in the economic system, he explained.

A spokesman for the National Liberal Party in
opposition, Ionel Danca, blamed the new tax on the authorities’ thirst for
money to the public budget, and spoke about the Government’s greed for incomes
from the taxes paid by companies. Danca warned that the Government is
destroying the most important sectors of the Romanian economy, and that the ferocious
over taxation of companies in the energy sector, in telecoms, banking and trade
will backfire, at the expense of the Romanians whose honest work supports the
functioning of the state.