Fewer taxes

Romania has a large number of taxes, something the business environment has often complained about. In a recent move, the government plans to eliminate some of them.

Corina Cristea, 15.05.2014, 12:45

It’s no longer news that Romania is among the countries with the largest number of taxes. According to statistics, apart from fiscal taxes, there are 364 different parafiscal taxes managed by 24 different bodies and regulated by 215 different pieces of legislation.

Defined as taxes that are not included in the Tax Code, but are charged by individual bodies for specific purposes, the parafiscal taxes include stamp duties, the taxes charged in certain fields to obtain a specific licence or document such as identity papers, criminal records, tax records, environment taxes and authorisation taxes for postal services.

Studies have shown that although these taxes are raised in exchange for a particular service or product, they do not always cover the expenses of the bodies charging them. As a result, the authorities in Bucharest have decided to eliminate or merge 27 such taxes and non-fiscal charges. Another 65 different taxes and parafiscal taxes will be reduced by ministerial orders.

This week, the finance ministry has proposed for public debate two such orders, while the taxes and parafiscal taxes will be established after consultations with a number of ministries and institutions. According to the finance minister Ioana Maria Petrescu, simplifying the tax system is in the best interest of both tax payers, who won’t have to spend hours queuing to pay these charges, and the administration, by eliminating the costs of managing a number of low taxes and charges.

One example is the elimination of the charge for issuing a temporary electronic passport or any other border crossing document, the charge for assistance in the establishment of a new company and the charge for obtaining approvals in the field of medical equipment and medicine.

Covering the costs is not the only criterion for measuring the cost effectiveness of such taxes. One other important criterion is how much these taxes account of the GDP compared to other fiscal returns and in this respect it has been shown that they account for very little. The competent authorities say the elimination or merger of taxes will in fact cut back the costs of the bodies charging them, reducing bureaucracy.