Proposed ‘household tax’ on global income to cut budget revenues, CDR says

Georgeta Gheorghe 24/04/2017 | 16:05

The introduction of the proposed new household tax on global income will trigger a very sharp drop of budget revenues, and the text of the document creates a fiscal disparity among household members, warns the Coalition for Romania’s Development.

The household concept, the coalition argues, as a pillar of the new system, is not regulated by Romanian legislation, and the definition is increasing from the start the complexity of the new fiscal system.

The analysis of other fiscal systems, such as that of the United States, shows that such tax systems are optional and implemented on an individual basis, if it is for the benefit of the contributor, the CDR says. The coalition also points to other flaws.

According to CDR, the introduction of the tax on global income, by eliminating the system of retaining the sums at the source and the monthly payment of the income tax, such as salaries, dividends, interest rates, as well as that of anticipated tax payments, will trigger a drop in the collection of budget revenues for 2018. The loss to the state budget, the CDR forecasts, will stand at 4 percent of GDP revenues.

Moreover, changing the rules in such a short interval, less than a year, will put a heavy load on the National Tax Authority, ANAF, in part due to a clear mechanism of tax collection. The coalition also warns that the Government must bear the costs of adapting ANAF’s IT system. Currently, the system is already experiencing challenges, and the changes can drive it to collapse.

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