President Igor Dodon said he is undecided about the fiscal reform announced by the PDM that was criticized by the opposition, civil society, the U.S.. the EU and IMF. He said he will “study in detail” the package of laws before promulgating or rejecting this and reminded that he himself was the author of a similar amnesty in 2007, which would have produced positive results and would have been supported by the foreign partners, including the IMF. Regrettably, it seems that the President has a short memory, said the authors of a new article of the Sic! project, IPN reports.
Those from Sic! remind that the “economic liberalization” reform done by the Communists (!) in 2007 had three components: fiscal amnesty (forgiveness of debts), legalization of undeclared capitals and the 0% tax on reinvested profit. Igor Dodon, as the minister of economy in the Tarlev-2 Cabinet, presented the bill in Parliament and promised a slam dunk : “At least about US$ 1 billion could be legalized as a result of these reforms in the case of capital liberalization alone. The other two reforms could have much bigger effects during the next years.”
The optimism of the future Socialist turned out to be exaggerated. As a result of this amnesty, debts to the state and related penalties in the amount of 4.3 billion lei were forgiven, even if the Communists initially promised that the budget will lose only half of this sum. As to capital amnesty, there was legalized only 360 million lei or US$ 35 million at the then exchange rate. In other words, only US$ 35 million of the (“at least”!) US$ 1 billion promised by Igor Dodon were legalized. The tax of 5% for legalization brought only 18 million lei into the public budget.
Ultimately, the amnesty of 2007 didn’t produce the expected result, but the promises sounded so nicely that the IMF also liked them, or not? No, say the Sic! article authors. It’s true that the reaction wasn’t so harsh as now, but the foreign experts were skeptical in 2007 too: “this step could damage fiscal discipline as the taxpayers will expect repeated fiscal amnesties and the taxpayers who honored their obligations will consider the amnesty unjust”. Another concern of the IMF mission was that “the President’s initiative concerning capital amnesty could also generate risks for the regime of preventing and combating money laundering.” Probably Igor Dodon forgot such details in 11 years.
Comparing the amnesty of 2007 and that of 2018, the President admits that “the conjuncture is now different”. It is probably a diplomatic way to make reference to the theft of the US$ 1 billion and the laundering of US$22 billion of the Russian mafia through the Moldovan legal and banking systems. Most of the criticism on the part of the opposition and civil society refers namely to this aspect: the legalization of undeclared capital, together with the law on citizenship by investment, is regarded as a method of legalizing and bringing back the stolen money to the country (to the beneficiaries, not the state). Moreover, all the judges and functionaries involved in the laundering of Russian money will have the chance to legalize, through third parties, the illegal commissions received then.
According to the article authors, the fiscal reform stimulated an international consensus: the amnesty poses more risks than benefits and will allow legalizing the stolen funds to the benefit of corrupt persons. The full article in Romanian is available here.
