Talks on “solidarity tax”

The ruling coalition in Bucharest is considering additional taxes for big companies

Ştefan Stoica, 08.12.2021, 13:50

Romanias coalition government faces significant budgetary strain, after having committed to raise minimum wages, public pensions and child allowances as of January 1.

These days the 2022 budget is being outlined, and a means to increase revenues would be to levy a solidarity tax on big companies. The idea came from the most junior member of the ruling coalition, the Democratic Union of Ethnic Hungarians in Romania. Its president, deputy PM Kelemen Hunor, said the proposed 1% of turnover will go into investments in priority fields such as healthcare and education.

“It is a short-term proposal, for one year, in order to increase revenues to the budget at a difficult time, when inflation and the rising energy prices force us to bring additional funding to the budget so as to help the people who need assistance,” Hunor explained. He added that in difficult periods, companies must show solidarity towards the people and the society from which they derive their profits.

The Social Democrats back the idea, but the Liberals are reluctant. The targeted private or public companies are the ones with turnover above 100 million euros.

The matter will be discussed with the business community, which has already responded with little pleasure to the rumours of overtaxing. The American Chamber of Commerce in Romania, representing over 470 American, Romanian and multinational companies, voiced concern with the governments plans to increase the tax burden on big companies in Romania, at a time when investments and businesses are already affected by multiple crises.

After an extended political crisis during which companies confidence in the Romanian business environment plummeted, concurrently with the Covid crisis, the energy crunch and deepening tensions in the labour market, the news of new taxes can only increase the risk of companies turning somewhere else for their investments and expansion plans, AmCham warned.

According to its officials, the lack of predictability and deepening instability entailed by rushed measures discourage investments and businesses plans for the Romanian market, and the medium and long-term negative impact will overshadow the short-term gains.

According to economic media, over 300 Romanian and foreign companies operating in the country may be affected by the 1% “solidarity tax”, and figures indicate that this way the government may collect an additional 1 billion euros to the state budget.

In turn, the Foreign Investors Council also wants the measure dropped, arguing that it punishes precisely those companies that comply with fiscal regulations and have managed to perform properly under restrictive Covid-related circumstances. (tr. A.M. Popescu)