Mobiasbanca advance financial education in Moldova
Head of state Igor Dodon has announced the promulgation, on August 9, 2018, of a set of law on budgetary-fiscal policies and wealth amnesty. Although the President’s special cooperation with the Democratic Party (PDM) has long since become predictable, we are still puzzled by the explanations he provides for his actions. The defense of the decision to promulgate is lengthy, yet with a simple gist: “Necessary, but insufficient.” His excuse, however, is more intricate: “this set of laws is a good base for the more important reforms, which the new socialist government will approach once it comes into power after the upcoming elections.” So, instead of watching over a balanced evolution of our country’s social-political events, over the legality of law adoption processes, the head of the state prefers to speculate on future events and spread propaganda.
However, this approach has brought into light several important things. First, through his futuristic arguing and excuses, the head of the state has transformed the protest of the PSRM parliamentary group into a bizarre act. What was the point for the PSRM group to walk out of the Parliament session hall on July 26, 2018, before the voting of said set of laws, if the head of the state considers it necessary and has promulgated it? Second, the head of the state has simply ignored the argument of the PSRM group: these laws were poorly prepared; their eclectic content proves they are a bad copy of bills drafted by PSRM; they were adopted with ostentatious breaches of transparency; and fiscal pardoning seeks to legalize the stolen billion, etc. These arguments by the PSRM group were ignored by the head of the state, who claimed that upon promulgating the laws he had “also taken into account comments given by experts, the academia, and of Moldovan and international opinion leaders.” Third, the head of the state has in fact made it clear that his visions are radically different from those of the PSRM group, and are closer to those of PDM.
Therefore, we find it noteworthy that the propagandistic swings of the head of the state – invoking the depopulation of the country as a result of European integration policies; accusations to development partners for their unwarranted meddling into Moldova’s internal affairs; self-praise for his exceptional role in a similar reform in 2007-2008, when he was Minister of Economy, etc, camouflages major discrepancies with the position of the PSRM group. First - the taxation policy. The head of the state welcomes the PDM initiative to reduce and introduce a flat income tax for individuals: “Why don’t we have enough experts in our country? Because salaries are small, and from 3000 lei a month the Chișinău Government will “lovingly” extract 18% of the income. In this context, it is agreeable to institute a flat tax of 12% on income for all individuals, yet again, it isn’t enough. For example, Balkan countries and Romania have even smaller tax rates, and the Government forgets that it is these countries we are up against when it comes to investments and labor force. This is absolutely insufficient in the context of introducing a flat tax and increasing individual exemptions, as proposed by the Government.” On the other hand, the position of PSRM, as expressed by Party leader Zinaida Greceanîi, is absolutely different: “We (PSRM) have been promoting increases to tax exempted income up to the living minimum, since 2009. Whenever there is talk of fiscal policy, we always mention this. They copied us well, and that is good for the citizens, we are all in for that. As for individual taxes, we, the socialists, have proposed three tax rates - 7%, with the exception of tax exempted minimum income, 17% and 25% – so that we can tax those with higher incomes properly. Who will benefit from this flat rate of 12%? Those with high incomes… What happens to those with mid-range incomes, since they don’t really have much to gain? There are many question marks. Such a reform could have started in 2014. Such reforms are launched when you have just come to power and have time to promote them, not on the final stretch, so that everyone is blindfolded and doesn’t understand what they voted for.”
A second major discrepancy between the head of the state and the PSRM group refers to the law on voluntary disclosure of wealth and fiscal incentives (tax pardon): “having analyzed the bill, I became convinced that it speaks only of assets that may have come from failure to pay certain taxes and DOES NOT cover other infringements, which might otherwise be liable to criminal investigation. Article 1 of the adopted law expressly states this fact, and Art. 12 eliminates any guarantees this law might give to the person making the disclosure, should it be found that this person’s declared possessions have come by means other than evasion… Finally, the initiatives also seek to return money into legal circulation. And I hereby state with all responsibility that – should any violations be observed, of any suspicions arise – immediately after the inauguration of a new parliamentary majority and a new Government in 2019, we will introduce a law on the lustration of capital.”
The counter-perspective of the PSRM group has again been expressed by group leader Zinaida Greceanîi: “the law on fiscal amnesty raises several question marks. Even if its authors have stipulated that this law doesn’t include dignitaries, prosecutors, judges, MPs, who have been in office starting with January 1, 2009, they failed to mention, and I mentioned this as a member of the committee – what about the relatives, persons affiliated to these MPs, prosecutors, judges; to which generation does the ban hold? They didn’t include this aspect, and this seems to be a clear window for, you know what. Therefore, this poses many questions.”
It is worth noting that the points of view expressed by Zinaida Greceanîi have coincided with those of representatives of Moldova’s development partners – EU, USA, WB, and IMF. In this sense, it is odd that the head of the state accuses development partners of duplicity, when their positions coincide with that of the PSRM group. And he does so elegantly: “The greatest “worries of the Western curators” towards Chișinău officials were spurred by measures “elegantly” dubbed by the authors as “wealth statement”, “fiscal incentive” and “liberalizations” of capital, of fiscal amnesty and decriminalizing of economic activity. I was saying earlier that I have great doubts that the “wards” have had the guts to propose these measure without prior acceptance from their western patrons.” This means that the West, in fact, supports the PDM reform, but pretends to critique it. Just like the PSRM group? If so, then the head of the state is due for some explaining. Who does he side with - PSRM or PDM? After all, the results of the upcoming Parliamentary elections on February 24, 2018, depends on this. And dependent on the results of the elections is the head of state’s occupation for the following two years of his mandate - a choice between honoring his constitutional obligations or to collecting funds for the “Din suflet” foundation.
ENEMO (the European Network of Election Monitoring Organizations) has deployed an International Election Observation Mission (IEOM) to observe the elections on 24 February 2019
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