2023-04-26 07:59:00
On the eve of the elections, Marcel Ciolacu took out of the drawer the proposal of overtaxation in the budget sector, coupling it with special pensions. Nicolae Ciucă also says that he is waiting for an analysis from Finance, but the idea is that those who earn more than the president are targeted.
Nicolae Ciucă and Marcel CiolacuPhoto: INQUAM Photos / Octav Ganea
When could this proposal be put into practice, if PSD, PNL and UDMR would agree, and the Parliament would vote a law in this regard, which would not fall to the Constitutional Court?
No earlier than 2025, claim political sources from both PSD and PNL. Until then, it is, at most, a campaign theme.
The constitutional dilemma
In the context of discussions about the reduction of budget expenditures, PSD leader Marcel Ciolacu launched the proposal of taxing the combination of salary and special pension for budget workers. According to HotNews.ro sources, the PSD leader was referring to special budget officers who hold special pensions and who are also at the head of state institutions such as ANRE, the Court of Accounts, ANAF, the Constitutional Court, etc.
Procedurally, such a proposal should be materialized through a draft law to be adopted by the Parliament.
There are at least two issues of applicability here. First, the Liberals have repeatedly stated that they do not support progressive taxation and want to maintain the flat rate.
Five days ago, Prime Minister Nicolae Ciucă stated that there is no discussion about the introduction of the progressive tax, but there is a working group at the Ministry of Finance that analyzes fiscal optimization measures. “PNL continues to support the single quota. We do not support the introduction of new taxes and fees, and what is to be decided will be based on an analysis and a debate applied to the situation in our country,” said the prime minister.
Secondly, if a law were to provide that progressive taxation would apply only to a category of employees (in this case budget workers), it would be challenged in the Constitutional Court and would fail the constitutionality test. More precisely, the legislative framework does not allow the application of a tax to be discretionary only for certain categories of taxpayers.
Thirdly, if a draft law would introduce progressive taxation on the cumulative salary-special pension for all categories of taxpayers from the budget or from the private system, as Marcel Ciolacu proposed in the Coalition meeting, there would still be problems.
Following a decision of the Constitutional Court in December 2020, the taxation of special pensions can be done under certain conditions, with an exact formula that does not contradict the decision of the constitutionalist judges.
We remind you that in 2020 the CCR rejected a draft law adopted by the Parliament that provided for the taxation of special pensions by 10% for those who obtain a pension between 2001 and 7,000 lei and by 85% for those who have more than 7,001 lei.
The tax provided for in the disputed law would have been applied only for the amount that exceeded the ceiling of 2,000 lei and that of 7,000 lei and only for the part that does not represent the pension based on contribution.
The electoral dilemma
Another problem, this time political, has to do with PSD and PNL’s image strategy for the next period, one year before the general elections. “It is very difficult, unpredictable, to change the Fiscal Code a year before the general elections. You can’t think about budgets and the private environment at the same time,” HotNews.ro sources explained.
Incidentally, PSD leader Marcel Ciolacu explained publicly that the proposal made in the coalition of additional, progressive taxation would only target budgets, not being discussed at this time for the private sector. Ciolacu directed the public discourse towards his own electorate, without specifying that progressive taxation cannot be applied only to a certain category of taxpayers.
“We are talking only about the cumulative salary and special pension and only about the budgetary area. At that moment, if through that sum you exceed the gross salary of the president, which is approximately 25,000 lei, it is normal to come, if it is constitutional, with additional taxation, because there are two revenues from the state budget. In the law, you cannot pass only those who also have a special pension component, you cannot prohibit only some. I believe that the correct approach is the threshold taxation area”, stated Ciolacu.
For his part, Prime Minister Nicolae Ciucă confirmed that Ciolacu’s proposal referred only to budget holders and not to the private sector. “We are talking about the taxation of certain incomes. The basic idea was to tax those who have higher salaries than the president. We are waiting for the measure to come up, we are waiting for the analysis of the Ministry of Finance”.
Progressive taxation – PSD’s favorite campaign theme
A year ago, the PSD launched several measures for the overtaxation of salary income from the state system higher than the salary of the President of Romania.
What the PSD proposals on progressive taxation look like
- Overtaxation by 40% of the amounts from salary income from the budget system that exceed the salary of the President of Romania;
- Two-step overtaxation of special pensions, namely a tax rate of 40% for the amount that exceeds the threshold of 9,000 lei (five average net pensions) and 90% for what exceeds 18,000 lei (10 average net pensions);
- Applying a progressive system of deductions for salaries under 4,500 lei, so that, at the minimum salary level, a tax of 0% is reached;
- A Health and Education contribution of 0.5% of turnover paid by companies with annual revenues of over 100 million euros. The measure will be temporary, applying for a limited period of two years.
How many budget officers have a higher salary than the president
The official statistics, valid in the middle of last year, show that 30,574 Romanians have a gross basic salary higher than that of the head of state. The President of Romania had a gross allowance corresponding to the position of 24,960 lei, according to information published by the Presidential Administration.
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