Business rooting for 18% tax

Business officials and analysts have hailed government plans to introduce a single global income tax for natural persons, most likely 18%, but are sceptical when it comes to its actual application, though. “I understand at least two of the reasons behind such a proposal. The first would be that the Finance Ministry has realised that it is easier to take little out of plenty than plenty out of little. Tax money is likely to drop at first, but it will subsequently go back to normal levels. A classical example would be the cut down in rent taxes applied in 1998 (from 40% to 15%), when revenues actually multiplied. Moreover, underground activities, as well as the interest of taxpayers in finding new ways to avoid paying taxes would be reduced. Furthermore, the tax cuts will certainly lead to an increase in consumption and implicitly to higher revenues derived from indirect taxes (excises, VAT). The second reason might be the upcoming elections,” attorney Gabriel Biris, associate partner with Haarmann Hemmelrath, told Ziarul Financiar. However, he expressed his scepticism with regard to the application of such a measure. “I think, though, that this will not happen mainly because of integration negotiations – such a tax would be too low as compared to the European Union average, and because of the IMF.” ZF