PRESIDENT DODON PROMULGATES LAWS ON TAX REFORM AND PROMISES TO CONTINUE DP-STARTED RADICAL ECONOMIC REFORMS AFTER ELECTIONS

Moldovan President Igor Dodon has promulgated the package of Laws on budget/fiscal policy and on capital amnesty that are being strongly criticized by the opposition, the civil society and Moldova’s development partners. He has presented a detailed argumentation of that step.

Writing on his Facebook page today, Igor Dodon explained that he had taken into considerable the comments heard from Moldovan and foreign experts and the Moldovan academia.

According to him, at promulgating the said laws the head of state was proceeding from the following considerations:

1. These measures can give an impulse to the country’s economic development, even though they are being applied too late. A belated reform, with all its shortcomings that will be eliminated subsequently, is better than a constant chaos in the sphere of budget and tax administering;

2. The chief conclusion is: the Government has understood its mistake made at rejecting the reform in 2007. Now the Government is thus trying to return the drowning ship of the Moldovan economy into the channel of development. Now, 10 years afterwards, the Moldovan rulers are beginning to use those very economic decisions, which they used to criticize in the near past;

3. Due to an erroneous taxation system, thousands of the people of business have left the country. That has inflicted a tremendous harm to the Moldovan economy;

4. In the present-day conditions, we can trust more in the business community as in the country’s stronghold than in the political class. Therefore, businesses need to be stimulated and supported.

The President also wrote: “My stance is totally clear, being well-founded from the economic, social and political points of view, and being aimed at the good of the country and its people”.

In his opinion, “Instead of preventing and minimizing risks in the economy well in advance, the Government is now acting as a firefighter, trying to extinguish the already flaming problems. But this will not save the current regime from a failure at the upcoming parliamentary elections”.

As was already reported by Infotag, at the very end of this past July the Moldovan Parliament approved a radical tax reform – a package of inter-related Laws stipulating the introduction of a common rate of taxation and lowering the individuals’ income tax rate to 12% from the previous 18%, lowering of the rate of taxation to the social insurance fund to 18% from the previous 23%, and some other measures of tax stimulation. The Laws stipulate also the cancelling of fines and penalties for economic operators’ tax arrears.

The Laws stipulate also a capital amnesty – legitimization of any financial means and/or real estate objects if the owner repays to the State Budget 3% of the stated cost of such belongings. This provision caused particularly sharp criticism by the opposition, civil society and Moldova’s development partners. In their opinion, these measures are aimed to legitimize the billion euros stolen from the Moldovan banking system in 2014. The IMF and World Bank country offices in Chisinau, the European Union Delegation to the Republic of Moldova and the United States Embassy expressed their extreme disappointment with such actions in a belief that the approved package of laws stimulates further thefts and corruption.

The President-promulgated Laws will come into effect on October 1, 2018.

Igor Dodon is promising that after the upcoming parliamentary elections [due on February 24, 2019] he will proceed with the radical economic reforms started by the incumbent Government on the ruling Democratic Party’s initiative.

“I believe this package of laws is a good prerequisite for further more radical reforms that will be implemented by the Government of Socialists that will come into power after the forthcoming parliamentary elections”, stated President Igor Dodon, the informal leader of the Party of Socialists.

He explained that the new government “will be conducting an efficient policy in the sphere of taxation administering that will promote capitalization of the results of this reform, elimination of dishonest competition (some companies pay – some do not), will cancel the tax on re-invested incomes, will make changes in the value-added taxation in the farm sector, and other”.

“Nobody will help us if we don’t become more active and business-like. We must create good business conditions that would attract investors, create conditions for business development, for creation of more jobs and for export growth”, stressed President Dodon.

In his opinion, “Without all this, the would-be new Government will continue going around with an outstretched hand, begging humanitarian assistance from the West or somebody else. We must put an end to this shameful tradition, and I am convinced we shall do this in the nearest future for the sake of Moldova and its citizens”.

On Wednesday, the United States Ambassador in Moldova and other international partners’ representatives requested President Dodon to not promulgate the Laws, which they believe present danger for the development of the Republic of Moldova.