Employers consider fiscal policy discourage enterprise

The fiscal policy, the Government proposes for the coming three years, will not develop the entrepreneurship, unless seriously changed, conclude the member-organizations of the Moldovan Employers Confederation (MEC,) after analyzing the draft of the Mid-Term Expenditures Frame (MTEF) for 2009-2011. The employers think that, maintaining a prudent fiscal policy in order to insure the continuity and attract foreign investments will not contribute to solve many economic and social issues, Info-Prim Neo reports, quoting a press-release of the MEC. MEC voices to raise the real salary, what in their opinion will decrease the flow of labor from Moldova. Yet, this increase should be insured by a sustainable development of the economy, not a pretended one. To bank on extensive factors in remuneration is not correct, say employers. MEC finds that the present fiscal and fiscal administration policies do not contribute to a significant rise of wages and to diminish the impact of informal economy. Overtaxing the wage-fund, which, according to official estimations, is as big as 45-55%, has a destabilizing effect on the labor market. Under these circumstances, the employer is not willing to raise the salaries, and the employee is not interested in providing productive and qualitative labor because their incomes are essentially reduced after levying the taxes. This intricate issue may be solved by optimizing fiscal and fiscal administration policies, the Employers Federation believes. MEC submitted a series of proposals and amendments to the MTEF to the Finance and Economy and Trade Ministries. The employers want to establish a single income tax of 10-12% for natural entities, instead of those two taxation thresholds now in force. They also propose to increase the personal annual exemptions to the existence minimum and later to index them; to deduct the expenditures related to education, leisure and to buying or building dwellings. MEC also proposes to establish the quota of social contributions paid off by the employer in ratio of 22% and by the employee in ratio of 5%, and to yearly reduce the quota paid by the employer with 2 percentage points during the next 5 years; maintaining the obligatory medical insurance quota at 6%; establishing a standard Value Added Tax of 18%; exempting the import of equipment, machines, raw materials, technologies, not produced in Moldova, from the VAT. The Mid-Term Expenditures Frame (MTEF) for 2009-2011 is a document of strategic planning, now in development. The Government has decided not to operate essential modifications in its fiscal policy. Finance Minister Mihai Pop reasoned a certain continuity in this area will be recorded this way. On the other hand, the predictability of the fiscal policy is essential to attract direct foreign investments.