“Would you prefer to raise flat tax or raise VAT?”

Premier Emil Boc said the Minister of Finance would revise the books of companies who idled activity in order to dodge the tax hike and commented that a “law is not forever, especially amid crisis”.

He outlined that this is a minimum tax and not a poll tax and the two don’t aggregate themselves but on the contrary they are deductible. Boc said the impact of enforcing the minimum tax is 300 million lei.

The Prime Minister told Realitatea TV that the introduction of minimum tax was “the least bad”, compared to the raise of VAT or flat tax which would affect the entire population. “We will examine the full extent of the impact (…) I think the introduction of poll tax has been misunderstood. Each year, there is a certain fluctuation of companies ceasing their economic activity”, said Boc.

Being asked whether the poll tax would be abolished this fall or not, or whether the economy would see any sign of revival, Emil Boc said “no law lasts forever in Romania, especially amid crisis”.

“The Government will reset its tax policy. Second of all, this measure was thought to be an instrument to battle tax evasion, and not as a fiscal burden, but as a mean to pare tax evasion to bone. Tax evasion is high in Romania, and tomorrow (Sunday), in the extraordinary session of the Government, we will probably adopt an emergency ordinance aimed at reducing tax avoidance in Romania,” Boc added.

Nita to propose abrogation of poll tax

Constantin Nita will propose the abolishment of minimum tax when the Government will tackle the budget projection for 2010, only in the context of economic performances and if the budget revenues would allow it, said Minister Constantin Nita.

“I said we would propose the abolishment of poll tax but only in the event of good economic performance and sufficient state budget revenues. We will forward this proposal when the Government will tackle the budget projection for 2010”, said the minister of SME, trade and business environment.

Constantin Nita said at a conference that among others, he would propose that companies with a turnover lower than 50,000 to be exempted from paying the minimum tax.

Within a month, the minister continued, it will be finalized the draft bill regarding the establishment of a target risk fund. This fund of 50 million euros will shore up companies who invest in innovation, or overseas.