Press Review - November 6, 2017

11.06.2017 By Oana Gavrila

Cabinet Discusses Proposed Tax Measures for 2018

Romania's government meets Monday to discuss proposed tax changes for 2018 after postponing talks on Friday because the government lacked required opinions of the legislative board.

The government in late September announced plans to transfer the payment of social security contributions from employers to employees, to replace a tax on profit with a tax on turnover, to introduce a solidarity tax for employers and a global income tax for individuals, as well as additional royalties for the oil industry.

It also plans to reverse a decade-old pension reform that has placed roughly 50% of people's pension contributions under private management. 

President Klaus Iohannis on Thursday criticized the government's proposed tax measures, warning their implementation would muddle the country's finances and hinder sustainable economic growth.

Analysts and representatives of the business environment criticized the plans and the government's haste in implementing them. Trade unions have organized protests against the transfer of social security contributions that they say would essentially cancel the wage hikes approved earlier this year.

The Economic and Social Council and the Fiscal Council both advised against the measures.

 

Chief Anticorruption Prosecutor Violated Parliament Authority, Says Constitutional Court

Romania’s chief anticorruption prosecutor Laura Codruta Kovesi must answer before the parliamentary committee on the 2009 presidential elections and her previous refusal to do so violated Parliament’s authority, Romania's Constitutional Court said Friday.

A press release from the Court reads that the institution considers Kovesi violated the principle of loyal collaboration between state institutions and Parliament's authority through her previous refusal to collaborate with the inquiry committee. The Court adds that Kovesi's lack of cooperation hindered the committee’s activity.

Kovesi was repeatedly asked to answer before the inquiry committee and provide all information and evidence that the committee would have found useful, yet she refused multiple times.

In response, Lower Chamber speaker Liviu Dragnea and Senate chairman Calin Popescu Tariceanu notified the Constitutional Court regarding a judicial conflict between Parliament and Public Ministry. The Court ruled out on October 3 that Kovesi must answer before the committee.

The inquiry committee on the 2009 elections is investigating the ways in which certain persons or institutions influenced the elections' outcome, as well as the organizational procedures and steps undertaken during the elections at polling places both in Romania and abroad.

 

Opposition Parties Join Anticorruption Demonstrations in Bucharest

Romania's opposition USR party and former prime minister Dacian Ciolos' political platform said they would join anticorruption protests held Sunday evening in Bucharest.

The opposition Liberal Party also announced it would participate in the demonstrations.

More than 10,000 people took part in protests across Romania on Sunday in an attempt to stop the government from passing new legislation overhauling the justice system and weakening the country's anticorruption efforts.

Sunday's demonstrations echoed ample anticorruption protests held at the beginning of the year when the government moved to decriminalize official misconduct. Demonstrations were held daily fro more than two weeks and the government eventually scrapped its plans.

The European Commission has warned Romania that its law change could undermine anticorruption efforts.

 

Economic And Social Council Gives Negative Opinion On Government Tax Plans

Romania’s Economic and Social Council, which comprises trade unions, employers' associations, and civil society, has advised against the Government’s proposed tax plans and said this opinion should raise concerns among Cabinet members.

The Economic and Social Council is a consultative body of Parliament and Government.

“The Council’s negative opinion, even though non-binding, should raise concerns among decision makers. National trade unions, various organizations, and associated structures have given the government a firm response regarding its plans to amend the Tax Code. People do not understand the reasons behind such measures, which will throw Romania’s economy and work relations into chaos,” National Trade Union Bloc leader Dumitru Costin said.

A press release from the National Trade Union Confederation “Cartel Alfa” reads that a general strike would be the natural response to the government's actions because these measures contradict their commitments towards employees.

The main issue unionists are dissatisfied with is the transfer of social contributions from employer to employee, which they fear it will lead to a drop in the net wages.