Fiscal relaxation turns into bluff

The much-advertised fiscal relaxation has turned out to be a bluff. The cut in the social security contribution, the unemployment fund contribution and the medical insurance contribution and the dissolution of the Special social solidarity fund cannot possibly compensate for the increase in the social security contribution (CAS).
The ceiling for computing the social security contribution was raised from three to five gross average salaries by the Government’s Emergency Ordinance 147, published in the Official Gazette on November 13.
“The famous tax relaxation will only work in the case of low wages. Even so, the additional gain is irrelevant. For instance, for a gross salary of 5,582,000 ROL (gross average salary in the economy), the gain will be worth about 20,000 ROL,” Gabriel Sincu, tax manager with the Haarman Hemmerlrath & Partner fiscal consulting firm says.
According to Sincu’s calculations, which he provided to Ziarul Financiar, the effects of Emergency Ordinance 147 coming into force are as follows:
* In case of high wages (more than 17 million ROL in gross salary), the net income decreases.
* Since most of the private companies negotiated their employees’ salaries at the net value, they will have to increase the gross salary to cover the differences. This implicitly means additional costs.
* Due to the computational formula specified in the Social Security Law, the raise of the ceiling from three to five average gross salaries will be most damaging to those companies with a wide salary spread.
* The only ones that stand to gain are the companies that largely pay small salaries (below the three average gross salaries in the economy), which usually are state-run companies.