Unstable tax system threatens EU accession

Romania has the most unstable fiscal system in the entire Central and Eastern Europe, which obstructs the building of a performance market economy, raising doubts about EU accession, say the representatives of the patronage confederations part of the Economic and Social Council (CES). On the other hand, Government spokesman Claudiu Lucaci says Romania may apply different VAT quotas as of 2004, a legislative modification in line with the EU accession requirements, which will include a series of goods and services. According to Lucaci, the Executive makes up for the increase in the profit tax quota for exporters from 6% to 12.5% by the allocation of significant state budget funds used as bonuses to boost exports. The standard profit tax cut may be operated if the fiscal incentives in force are cancelled, because the increase in the quota abides by the loyalty principle as instructed by the European Union, Lucaci says. Doru Frunzulica, CES deputy chairman said the fiscal regulations enacted by the end of last year had had a negative impact on both employers and employees, as the taxes and duties in Romania had become more drastic than those in the other CEE states. ZF