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Effects of deductions – of pensions, abuse and democracy: When pensions grow (in 2017!) by 25%, by how much should salaries increase and what the source of this growth should be?

de Marin Pana 9.2.2017

Between the deductions of tax on pension, criminalizing the abuse of office and partial application of democracy there is a material connection, as concrete as possible. And especially financially measurable. Based on the de facto connivance of two benefiting parties of the society and the special involvement of a paying part. The mechanism is shown in the following:

According to Law 227/2015, applied from 1 January 2016 for the pension income, the following were paid as taxes to the state budget:

  • health insurance contribution (CASS) of 5.5% for the amounts exceeding the value of the pension point (increased from 871.70 lei to 917.50 lei at the beginning of this year)
  • income tax calculated by applying 16% on the amount after deducting 1,100 lei and the above CASS tax

According to Law 2/2017, passed on 5 January 2017 and applied as of 1 February 2017, CASS is no longer applied to the pension income and the deduction has been increased to 2,000 lei.

The practical effect of these changes is shown below, where the increase of the pension point by precisely 5.25% has much simplified the presentation, as a pension of 1,900 lei in 2016 reached exactly 2,000 lei in 2017.


  • Evolution of a pension amounting 1,900 lei in 2016 or 2,000 lei in 2017
  • Month
  • Gross pension
  • CASS
  • Income tax
  • Total payments to the state budget
  • Net pension
  • – change


It is noteworthy that, as promised in the electoral program, as of 1 July 2017, the gross pension is to increase again by 9%. That would make the pension of 2,000 lei shown above to increase to 2,180 lei, gross amount and 2,151 lei, net amount (only by 7.6%, as the effect of the 16% tax would, again, appear for the amount that exceeds 2,000 lei).

Altogether, in July 2017 compared to December 2016, the net pension will increase from 1,724 lei to 2,151 lei, meaning by almost 25%. Which explains, in fact, the position of those who ended their activity and the result of elections consisting of a solid majority in the Parliament. But also, the position of the elected ones who also feel entitled to a deduction.

A deduction that, by keeping the proportions, might not be 2,000 lei but 200,000 lei. The 1 to100 ratio seems quite logical in terms of representativeness in a modern democracy, in which you vote irrespective of whether you pay or not taxes (based on the “Liberte, Egalite, Fraternite” principle). Well, what to vote for? To not pay taxes, logically, because that is why the country has employees (that’s right, less active in voting), namely to charge them and take their money, to be enough for everyone.

To cantankerous who relies on clichés we offer an inquiry topic: how will the amount of 165 lei from the table above be replaced in the budget revenues (194 lei saved from tax minus 29 lei reintroduced in the taxable amount at the middle of the year), more exactly how will the bill of the exuberant deductibility be paid in the next years and by when?

For now, the direct payment in 2017, beyond the increase in the cost of financing the public debt caused by the deficiency of the democracy already attached to our image at the international level (see the position of the six embassies and the EU) will be made by those who participated in the protests at the eleventh hour, their descendants and their descendants’ descendants, according to the needs arising from the budget implementation.

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