The fiscal system and its level, structure and technology practice shaped and still continue to do so the social and economical policies. Fiscal policy, more egalitarian according to  the socialist oriented doctrines and more leisure according to the liberal ones, can help, propel or hold down the enthusiasm by seize the present.

The concern to establish fiscal policies designed to facilitate economic development, appease social tensions and re-establish the normal status and position of the citizens and entrepreneurs facing taxation represented a constant for Romanian political makers in the last years.

One side of this concern came into being by initiating, since 2000, the global profit tax. The experiment is based legally on OG. no. 73/1999, Methodological norms no. 1066/29 November 1999 by the Ministry of Finance regarding the application of this statute and HG no. 611/13 July 2000 regarding the restoration the monthly standard for taxation of incomes from salaries and pensions and updating the fixed amounts provided by OG no. 73/1999.

Theoretical, methodological and judicial object of dispute

Although was already applied, this initiative proved to be a theoretical, methodological and judicial object of dispute. The landmarks set prevent us to provide an exhaustive approach of an entire topic resulted from the endless contradictory discussions. We will only present some of the advantages and disadvantages caused by this type of constraint to the economical and social system.

It is worth noting that OG no. 73/1999, the main normative act concerns two methods of constraint: first one targets the globalization of three income categories (salaries, independent activities and rental and leasing) – these are to be impose after the end of fiscal year; the second one means fiscal constraint, with deduction from dividends, interests incomes or from transferring property rights on real estate values and social parts and also from gambling and other incomes.

The two methods of constraint proposed through already mentioned governmental ordinance act as support in harmonizing Romania’s fiscal policy with those successfully applied in other European countries with market economy. Within the same context we have to mention that the current national system is designed and used also to ensure harmonizing with the European legal system. The initial premise supports this approach: the taxable mass is established mostly based on the personal declarations of the tax payers; in other words, the civic conscience is called upon and the trust that the state has to have in citizens.

Globalizing those three types of income and imposing their net sum with the same quota ensures a unitary treatment of the incomes, regardless of their origin. Generally, this fact was perceived as being positive. Including this measure on the plus list seems to us a bit forced. The obvious simplifying feature of the procedure can be considered positive: the tax is in the end applied to a global sum and not to every category of income in part; the system allows a simplified accountancy for those with independent incomes and also to easily complete standard fiscal sheets for the other two income categories. Also much easier is the taxable net income reporting for the monthly and yearly ready reckon, according to which a certain quota of constraint, on income slices, is applied. Also obvious here is the attempt to ensure more transparency to the fiscal legislation. Even without any previous special knowledge, any tax payer can inform him/herself following the shortest way, right from the legislation act, about his/hers fiscal obligations, and can determine in advance how to build his/her own spending and income budget.

Income from work were always protected

Equating the incomes from salaries with those obtained from concession of assets use in order to be taxed cannot be considered to be equitable, even though it was claimed to be ensured through the mentioned legislative act.  Considering as starting point the idea that equity does not mean also equal treatment one can observe in the history of fiscal policy, here and abroad in the civilized and developed countries the fact that incomes from work were always protected. Work is the production factor that enlivens all the others and the encouragement to use it with maximum efficiency was realized also by “gently” taxation of these types of incomes compared to those obtained from exploiting other kinds of capital. All written or oral accounts on the OG no. 73/1999, underline the essential idea according to which violation of this fundamental principle belonging to reasoning the fiscal policies is integrated as positive measure ensuring the elimination of discriminations in the fiscal treatment of different types of incomes and thus as a strengthening of fiscal equity. Considering the above mentioned arguments, we believe that “the same income, regardless of its source holds the same fiscal importance” motto cannot be used as an ensign of a fiscal policy that promotes equity.

Instead widening the incomes that can be taxed, with few exceptions regarding aspects of social protection and a gradual standard of constraint, personalizing the fiscal task and establishing a sum for a non taxable income as basic personal deductions and additional deductions for people under tax payers care, with updating their income situation according to the inflation rates so that unrealistic incomes are not realized as a result of inflationist outbreaks, can sustain the idea of fiscal equity.

An achievement in the spirit of fiscal equity can be also considered the measure to include and assimilate the income from salaries and those received in kind or from other sources than salaries provided by the employer to the employee in any form, either as a reward for its effort or as other form. In this way, the dignitaries indemnities, monthly allowances, subsidies, increases and other rights of the military personnel, the net monthly allowance as well as the sum from the net income for autonomous administrations officials, national commercial societies with state main holder, the sums for censors, general assembly representatives in the board of trustees, etc. all these are considered and treated as taxable incomes similar to salaries. Regarding in kind contributions such as usage of vehicles of any kind belonging to the institution or firm for personal purposes, using a residence with the same status for personal purposes, providing food, clothing, timber, fire wood, electrical energy, heating, subscriptions of any kind, traveling permits, treatment and rest tickets, etc. are evaluated according to the market prices and taxed with the standard reckon; any support for preferential treatment for employees in transportation, electricity, banks, etc. were prevented.  Considering that a bank employee has to pay taxes for the positive difference between the current interest of his creditor and the preferential interest for the credit received as a member of the creditor institution, the preferential treatment for some and discriminating for others cannot be imposed anymore as the membership in a providing services society (by virtue of employee) does not count that much.

A few absurdities

With few chances to receive a positive approach is the measure to exempt from taxes the gambling, prizes and bonuses in money and/or in kind incomes under 3 million lei for each profit realized by the same organizer or payer in a single day; those 3 million represent exactly the medium monthly income for all the other employees in Romania, which is taxable and obtained with the effort consumed in a month.  The government put into effect the OG no. 73/2000 and claimed, officially and ostentatiously that it represented a fiscal relaxation. Unfortunately, many disagreed.  It is possible that at the end of fiscal year, in the spring of 2001, their number could decrease significantly, as they will observe that their incomes are taxed at the maximum level possible; it is easy to understand why, as 60 million and respectively, 64.7 million lei from July 2000 are sums that can be reached in a fiscal year. For every sum exceeding these levels, a constraint quota of 40% is imposed. Their maximum annual slices mirror a net medium monthly income of roughly 5 million lei. At an exchange rate of 25.000 lei/dollar, it means that a tax payer with a 200 dollars income/month is considered to be a prosperous one by the Romanian state – a rich person and as such, he/she must pay the price to the state treasury, with a 40% tax level for “daring” to advance in the hierarchy. A net medium monthly income of 200 dollars indicates more a subsistence economy and third world situation. With such a base for perception, claims of fiscal relaxation are only a humorous pretension. On the contrary, the constraint quotas prove that the state encourages a suffocating, confiscatory policy, without real and robust budgetary sources – a lack determined by the economical recession – leading to a final solution, namely work enslavement by means of taxation.