Savings interest could be taxed at 12% next year, compared to this year’s 3%, the draft budget and tax policy proposes.

During a talk show on Radio Moldova, Minister of Finance Dumitru Budeanschi said that it would be fair to tax savings interest just like other form of individual income. 

“If people working hard to earn a salary pay a 12% tax out of that salary, why should people making some money off their savings pay only 3%, and not 12%? I don’t see a good reason why a form of income from a different source should be taxed so low compared to labor income”, explained Budeanschi. 

The minister said the four-fold rise would make all the more sense now, bearing in mind that this year’s record high inflation caused income from savings interest to grow.

But Mariana Rufa, director of the European Association, thinks the 12% rate could weaken people’s trust in banks and undo the progress banks made in rebuilding their collective reputation after the infamous 2014 fraud.

“People’s confidence in financial and banking deposits has increased in recent years. In general, trust in financial institutions has increased after the (2014) bank fraud. Still, it’s difficult to say we have reached a developed financial market in Moldova. If savings income is taxed at 12%, instead of the current 3%, there is a probability that people will withdraw their money. We really hope the authorities will realize this and we will be able to reach a consensus on a lower rate”, said Rufa.

In reply, Budeanschi said it’s unlikely the higher rate will be felt at all by the average depositor, as it rather targets those “who earn millions” from bank deposits.