Presidential initiatives - a dangerous sign for the economic stability and rule of law. Economic Analysis

The annulment of fiscal debts is an extremely dangerous practice and will lead to a series of negative consequences, such as the loss of government revenue, discouragement of those who paid taxes, diminishing of the fiscal discipline, discouragement of fiscal workers, promotion of inefficiency, the experts of IDIS “Viitorul” consider. By totally and unconditionally forgiving debts, the business environment of Moldova will continue to remain uncompetitive, undisciplined and inclined to fiscal offences. At present, the fiscal debts of the economic entities amount to about MDL 2.5 bln. The debts of the economic entities to the state budget constitute about MDL 966 mln, the debts to the social insurances budget constitute MDL 272 mln, to the budget of social insurances – MDL 1243.4 mln, to the budget of medical insurances – the debts are insignificant and make up only MDL 4 mln. Public companies have debts worth MDL 441 mln, or 18% of the total debts. More than one half of the debtors have debts lower than MDL 5 thousand. It is obvious that not these debtors are the beneficiaries of this policy, and when the Ministry of Finance says that it is impossible to recoup the money from the unpaid taxes it refers exactly to this category of taxpayers. The general mass of small debtors is used only as a rhetoric argument in order to exonerate from important sums several categories of taxpayers for whom sufficient instruments to collect the debts have been created. The experts of IDIS “Viitorul” say that this type of policy can not contribute to the increase of debtors’ competitiveness; does not encourage them to improve their management, to develop the production and innovation capacities, to reduce irrational costs etc. The experts assert that the real promoters of the fiscal amnesty are in fact the traditional “customers” of the former Council of Creditors under the PM of Moldova, a body which was liquidated in 2006 at the request and according to the agreement between IMF and Moldova. This decision was one of the main requirements for concluding the Memorandum IMF-Moldova and resuming the external financing. [Annulment of fiscal debts is an extremely dangerous practice] According to the experts, the state must have a clear policy in what concerns recouping and not forgiving the debts of the taxpayers. The internal legislation offers a series of instruments that could have been used to avoid the debts of MDL 2.5 bln. Moreover, the statement that “only 10% can be recouped” shows the superficial quality of the fiscal bodies. IDIS “Viitorul” considers that in 2007 Moldova needs a new state policy on recouping the debts to the national public budget, which would allow collecting at least MDL 1 bln. In order to make this real, there are needed several complex actions, such as total amnesty – for the companies working for at least 2-3 years, who initiated liquidation procedures of the company and the total debts of which does not exceeds MDL 5 thousand. In this way the companies which do not work de facto but are registered in the official documents will be liquidated. The amnesty of the fines and penalties is proposed for all companies which pay all debts to all budgets or transform the debts in shares of the state in that company. This procedure can be used first of all in the case of companies where the state already holds shares, as well as in the case of the companies where the state and the shareholders accept to pay the debts in such a manner. The bankruptcy procedure can be applied in the rest of cases. On December 5, 2006, the State Tax Inspectorate warned over 2700 companies in the municipality of Chisinau alone about the compulsory character of the bankruptcy procedure. As outlined in the Law on Bankruptcy, the companies which did not submit the necessary documents for starting the bankruptcy procedure should have been taken action against. The fact that the justice did not acted promptly and efficient shows the immobility of the judicial bodies. The experts of IDIS “Viitorul” consider that spontaneous introduction of the 3 initiatives is a dangerous sign for the economic stability and of the rule of law. The lack of thorough analysis regarding the effects and impact could cause tremendous damages, as long as the society has insufficient analytic information; there is no balanced communication and the state bodies work inappropriately. The experts mistrust the suspicious haste in what concerns the promotion of these radical initiatives by the authorities, skipping the traditional consultation-approval-evaluation procedure, which is specific to the rule of law, especially in the states where the economy is not functional and the rule of law is developing.