Ion Iliescu ends talks of flat tax. Again

The introduction of a flat tax for the incomes earned by individuals will not happen this year, but the current taxation system may be modified by reducing the number of income categories from three to five as of 2005, Finance minister Mihai Tanasescu said. “The flat tax remains a matter of consideration for the Finance Ministry, but I don’t think it will be possible to implement, politically speaking, so I would rather not talk about it anymore in 2004,” Tanasescu added. He specified the Finance Ministry had set up a group to perform simulations and comparative analyses of a flat tax system. “I think it’s more important to abide by the political decisions in the political year 2004,” Tanasescu said. President Ion Iliescu early this week said that a progressive taxation system was a redistribution instrument and a social solidarity mechanism. The head of State said the pressure for a constant decrease in certain tax categories, which favoured the rich, was actually challenging one of the most important functions of the modern state, i.e. that of social cohesion organiser and guarantor of the national cohesion. The President has been one of the most adamant critics of the flat tax introduction, an idea he has been opposing since last year. ZF