The Finance Minister Viorel Stefan announced on Wednesday that the future Tax Code will provide the option for a global tax payment on household income, which will become this way an entity recognized from the tax perspective.
The idea was first presented by the Minister of Labour, Lia Olguta Vasilescu, who announced Tuesday night that Romanians will be able to deduct all expenses and this way the black economy will disappear from the country.
„By household, we understand a group of people, whether relatives or not, who agree by signature to register with the tax authority that they constituted a common heritage. Not for commercial purposes, but to manage their family needs,” said the Minister of Finance on Wednesday.
This way, the household will become a recognized tax entity. „The common heritage is registered with the tax authority and when the global tax calculation is made, it is considered the household,” said Viorel Stefan.
He said that there is also the possibility of setting up households between unrelated families who, for example, live in the same building. Stefan said that the organization of households recognized from the tax point of view will also reduce bureaucracy. „Many troubles will disappear, as those related to the undivided ownership,” said Viorel Stefan.
The details that the Minister of Labour provided Tuesday: „This is the American system if you like. If they read the government program they will understand how to do this. The idea is to bring to surface all the money possible from the black economy. This is also related to how we collect money to increase salaries. Well, we tax everything. You, for instance, if next year will be able to take your child to a ballet school and deduct this expense based on the receipt, will you or not ask for the receipt? Logical. If you curtain windows in your house and know you can deduct the expenses, will you or not ask for a receipt? You will get to a point when you ask everywhere for invoices. You take your child to tutoring, ask for receipts and can deduct the expenses. The idea is not to make Romanians plunge even more into debt, to bring everything from the black to the white economy„.
Gabriel Biris: I do not understand why we look for adjusting the most stable and predictable tax
Former Secretary of State in the Ministry of Finance, Gabriel Biris, commented Tuesday on Facebook, the ideas of the Minister Lia Olguta Vasilescu. „Household tax” is a new concept in our tax law and is specific to countries with high progressive tax rates, of over 40%, as we had until 2004, writes lawer Gabriel Biris.
„The concept allows placing the tax burden fairly between spouses when one spouse does not earn anything or earn significantly below the threshold set for the maximum tax rate. For instance, if the tax is 40% on incomes exceeding 100,000/year and one spouse has no income, the household tax would mean that the family would pay 40% on the amount exceeding 200,000, which would lower the tax burden. When you have one only tax rate, that does not matter anymore. Even if there would be two tax rates (0% on the income up to 2,000 lei and 10% on the amount that exceeds this threshold), the household tax would almost not help at all, while the administrative costs would not be insignificant…
I simply do not understand what they wish to do …
The occurrence of this concept, especially in the context of the increasingly intense discussions on the excessive deficit brings to our minds the fact that the Government omits to say something about which everybody whispers: eliminate the flat tax (the 0/10% tax is also a flat tax in reality) and go back to significantly higher progressive tax rates…
Obviously, nobody would want that, not even the PSD voters. Nothing seems clear now and this confusion does not help to restore a climate of confidence, optimism, without which it is not possible to (still) achieve the economic growth targets.
Moreover, I do not understand why we should look for adjusting the income tax, the most stable and predictable tax in the last decade! This is what the economy needs to develop, stability and predictability … Our main problem are the contributions that are now a mess and are likely to become even more a mess.”
