GOVERNMENT VOTES DOWN WHOLE PACKAGE OF PRESIDENTIAL INITIATIVES

The Moldovan Government has again rejected several essential legislative initiatives put forward by President Igor Dodon, claiming that they will inevitably lead to a considerable Budget deficit, whereas compensation measures will not ensure sufficient incomes for the coverage of emerging Budget losses.

On Friday, the governmental Monitorul Oficial bulletin published the Government’s conclusion on the draft Law on amending certain legislative acts. The said initiatives implied inter alia the proposal to introduce a 0% rate on the income tax on legal entities reinvesting their incomes in production development.

The Government said this measure will lead to a considerable short-receipt of Budget revenues – almost 1.6 billion lei a year, and reminded that even without this proposed rate reduction, Moldova has one of the lowest rates in this region of Europe (after Bulgaria, having 10%) – 12%. For comparison: in Romania the rate is 16%, in Ukraine – 18%, in Slovenia – 19% and in Russia 20%.

Also, the Government declined the initiative on introducing a tax rate of 36% on the incomes received from the difference between exchange rates for commercial banks, regarding the difference to be “discriminating and restricting”.

As for the presidential initiative on the taxation of governmental securities, the Government arrived at a conclusion that this should lead to higher interest rates on these financial instruments – to an amount of the tax applied and, as a consequence, to an increase of Budget expenditures for servicing the domestic State debt.

“One should not forget that interest rates on governmental securities serve a benchmark for various central and local governance organs or public subjects at taking decisions on concluding credit agreements, placement of available monetary means on deposits and issuing of governmental securities”, said the governmental Resolution.

Its authors refused to support also the President’s proposal to raise the personal tax exemption from 10,620 lei/year currently up to the size of the annual subsistence level sum (calculated for the previous year) because this measure would diminish Budget revenues by minimum 700 million lei.