The local taxes could be capped as of next year. Such a proposal was formulated by the Ministry of Finance, which argued that the exclusion of capping generates uncertainty for the business community and creates a selective approach to setting the applicable local taxes and their rates. On the other hand, the Congress of Local Authorities of Moldova (CALM) said the capping of taxes is not an appropriate solution. On the contrary, this initiative will lead to conflicts, IPN reports.

The 2021draft customs and fiscal policy document proposed for public debates says that in the context of a priority strategy – decentralization – the exclusion of capping of local taxes revealed a number of shortcomings of the local public authorities in the fulfillment of related duties, such as the selective approach of the responsible authorities of different localities to setting the applicable local taxes and their rates.

Under the draft document, the upper limit of the local taxes will be set depending on the analysis of the current rates applied by the local authorities.

The CALM said it seems that the Ministry of Finance chose the easiest way and someone pursues particular goals in this case. It insists on this capping and this is the fourth attempt to introduce it already even if there is no relevant study of the problem that would justify this initiative.

“We have 898 mayor’s offices and they are all different by the size of population and budget, by economic development, relations between the local public administration and the community. How can valid caps be set for all the mayor’s offices?” said CALM executive director Viorel Furdui.

He noted that this way the mayors are indirectly accused of blocking the economic activity of businesses, but this is not true. “There could be particular cases, but they are few in number and should be analyzed. Even so, the capping of taxes is not an appropriate solution. On the contrary, this initiative will create bigger conflicts,” stated Viorel Furdui.