Miracle cure for state budget problems: crusade against $2-4bn tax evasion

The authorities seem to have found a miracle cure for the problems plaguing the state budget. The solution could feed money into the budget, in order to sustain a cut in salary taxes, solve the healthcare system crisis and pump up education funds: an ample control action aimed to fight the big tax evasion acts.

According to official estimates, this action could bring some 2-4 billion dollars to the state budget. The amount stands for the fiscal evasion in Romania.

The National Control Authority (ANC) yesterday said its institutions (Financial Guard, National Bureau for Preventing and Fighting Money Laundering) and the Economic-Financial Police (from the Ministry of Administration and Interior) are launching a massive operation aimed to uncover and fight the big tax evasion.

“The action aims to retrieve an amount ranging between 2-4 billion dollars annually. The money will go to the state budget and will be used to lower the salary and income tax paid by the population and the profit and dividend taxes paid by the economic units. Also, we aim to give more money to the healthcare and education systems,” said Ionel Blanculescu, the Control Authority minister.

The sums mentioned by the minister account in fact for the level of fiscal evasion in Romania. “As far as we are concerned, this money does not reach the state budget and is not directed at culture, healthcare or education, either. This money is thus evading the tax system,” Blanculescu said. “This is indeed a scourge,” the minister added.

Blanculescu stated that Romanian companies last year posted total cumulated turnover of $80 billion, whereas the profitability rate was “only” 6.6%.

“Some economic units are declaring false, masked profits. Real profits are at least three times bigger, considering a very simple inference: no businessperson will invest money set to bring net earnings that will not exceed interest rates,” the minister also said. ANC studies show that, under the most pessimistic scenario, the profitability rate should amount to 10-15%.

Investigators will mainly eye the oil businesses, alcohol and alcohol products, services and constructions, import-export operations, but also legal assistance and even notarial activities.

“We do appreciate this kind of measures, as long as they are indiscriminately applied both to state-owned and private companies. And I am saying this because the Government is still displaying hostility against company owners,” Marian Milut, chairman of the National Union of Romanian Patronage told Ziarul Financiar. miruna.lebedencu@zf.ro