Businesspersons would take 19% flat tax over higher VAT

The Association of Businesspersons in Romania (AOAR) is in favour of an increase in the flat tax from 16% to 19%, because an increase in VAT would impact on both companies and consumers. “The increase in the flat tax would lead to an improvement in tax collection for the state budget. On the other hand, an increase in VAT will lead to a decline in the companies” profits and in the taxation base and budgetary revenue implicitly,” Cristian Parvan, the general secretary of AOAR yesterday said. He explained the authorities should be more transparent and “clearly say how much money the budget needs.” “This way we would be able to put our business in perspective and devise a business plan around these needs. The authorities have to think of fiscal strategies because budget revenues are not only derived by raising taxes,” Parvan added. During their latest visit to Romania, the IMF experts recommended the authorities to increase either the VAT or the flat tax, as viable options to boost budget revenues. Premier Tariceanu later said the Government planned to maintain the 16% flat tax, but that other taxes and duties, which are not at this level now, would have to be adjusted, with some of them possibly having to be increased. As for the relation between banks and companies, the AOAR official said that corporate lending is still low in Romania, compared with other countries in the region, which affects corporate competitiveness. ZF