The noncommercial organizations affiliated to state institutions are among the top organizations that benefit from the percentage distribution mechanism known as the “2% mechanism”. A conflict of interest arises when the organization responsible for the distribution of the money accumulated through the “2% mechanism” is also an indirect beneficiary, ASIST Analytics author Mark Mazureanu stated when presenting the results of an analysis carried out by the National Council of NGOs of Moldova and CONTACT Center.
In a news conference at IPN, Mark Mazureanu gave as example the Association of Veterans and Pensioners of the State Main Tax Inspectorate, which is among the top beneficiaries of the “2% mechanism”. The Association of Veterans and Pensioners of the Ministry of the Interior comes second on the list. A lot of organizations reported that the members of the forces are administratively “motivated” to allocate the 2% of the income tax to the given organizations.
The authors of the analysis recommend banning the SCOs affiliated to public institutions from benefitting from the “2% mechanism” or banning the employees of public institutions from redistributing the given money to affiliated NGOs, and ensuring transparent control.
In many cases, the costs associated with the management of the funds accumulated through the “2% mechanism” are larger than the benefits this mechanism can offer. The proposal is to create a mechanism for the beneficiaries to be able to direct the received funds to other organizations that accumulate larger sums of money or to extend the reporting period for the accumulated funds. This period is now of two years. Also, the banks should open a free account for the financial resources allocated through the “2% mechanism”.
A recommendation is to simplify the method of reporting the incomes obtained by this mechanism. The procedure is now difficult and is the same for the organizations that gather 700,000 lei a year and for those that get 7 lei a year. Therefore, many organizations would like to renounce this mechanism.
Mark Mazureanu also spoke about the reporting of the method of using the funds collected by the “2% mechanism”. The reports come in PDF format and the data cannot be desegregated. It is proposed changing the format. The data should not come to the platforms of public institutions and all the reports should be loaded on one platform.
The law on the percentage distribution mechanism or the “2% law” was adopted in 2014. In 2016, there were adopted the regulations for implementing this law, while since 2017, the private individuals who pay taxes to the state have been able to direct 2% of the income tax to the entitled organizations. This mechanism is intended for civil society organizations and religious denominations. Over 900 organizations now benefit from this mechanism. The analysis authors said the list of beneficiaries should include the education institutions as these can use the funds to supplement the school stock.
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