President’s initiatives will have no effect – expert

An economic analyst says that the initiatives of Vladimir Voronin on the liberalisation of economy presented yesterday at a Government session, although revolutionary, will have no effect. Commenting on the initiative of the president on cancelling the income tax in case the incomes will be reinvested, the economic analyst Veaceslav Ionita told Info-Prim Neo that the income tax – which has an insignificant contribution of less than MDL 1 bln to the National Public Budget totalling MDL 19 bln – is not a reason for the fact that the entrepreneurship is not developing. In his words, the development of businesses is obstructed by corruption, state’s excessive interference, judicial issues and the unfavourable investment climate. “We shouldn’t blame the income tax, because it’s the lowest in Europe, and annulling it will not make our economic system any better”, the expert says, considering wrong the opinion that cancelling it will spur investments. Ionita says that, as long as a company wants to maintain its money into circulation the state does not collect taxes, because the financial means are taxed only if used for consumption. [Fiscal amnesty is a bad idea] According to the expert, underground economy will not be stopped in this way because the companies have double-entry bookkeeping in order to pay the wages unofficially, because of the high taxes which have to be paid to the social insurances budget. Moreover, the expert is sure that the President did not have consultations with foreign experts, therefore the initiative will be harshly criticised by the international financial bodies. According to Ionita, the state budget of Moldova is very unilateral, made up almost entirely from the consumption tax. “For a long time already we have been advised to increase the budget in what concerns the income tax, a measure ignored so far”, the expert says, mentioning that the president’s initiative is in conflict with the standards of the international financial bodies. Fiscal amnesty is even a worse idea, the expert says, considering that such an initiative should be promoted in case the authorities have found a flaw, a legislation gap, which created vicious fiscal cycles. In this case, Ionita says that the State stimulates the inefficient ones by forgetting the debts, and the efficient companies will ask whether it is ok to be correct with the state if they have the same obligations as the companies which did not pay the taxes. [State-run companies with considerable debts are favoured] The expert says that usually the companies which do not pay taxes have a very bad activity, precarious management and low efficiency. Veaceslav Ionita says that the fiscal amnesty was requested by the companies “allied with the government”, especially the state companies with significant debts, which will be favoured by the state to the detriment of private and foreign companies, and in this case the Tax Inspectorate should be honest and publicise the list of companies with the largest debts. The economic analyst says that nowhere in the world the amnesty of the capital has made the system better, although in the case of Moldova the expert does not exclude the fact that it could work. The amnesty of the capital is hard to understand, as it means legalising the incomes of the companies which were illegally performing their activity. The situation would be easier, he says, only in the case the legalisation would approach the tax dodging, and not the illegal incomes. Ionita says that not even in this case has the State taken into consideration the recommendation of the businessmen, who have for many a time pleaded for stopping excessive state interference, meaning lots of licenses, documents and certificates. This is nothing else than bureaucracy which “collects illegal taxes, equalling in value the legal taxes”; corruption which is generated by the excessive regulation, and justice which does not defend businesses.