The first thing the State should do if it wants to help the business environment would be to reduce the social security contribution from the current 49.5% to 44%. The latter level is used in the neighbouring countries at the moment, says Florin Pogonaru, chairman of the Association of Business People in Romania (AOAR). The taxation on capital, the taxation of the reinvested profit to be precise, burdens the business people, as well. AOAR chairman says the tax on the corporate profit should be cut and the dividend tax increased so as to protect capital reinvestment. A relevant example in this regard would be Estonia, which levies 0% tax on profit and 25% tax on dividends. There are three major problems with the Romanian economy now, Pogonaru explains. These are the payroll taxes, the labour code and the public-private partnerships endorsed by the Government without publicly announcing them and the conditions entailed, which is a significant distortion for the business environment. As for the labour code, AOAR believes the regulations for hiring and firing people should be more flexible, therefore benefiting both the business environment and the Romanian economy. AOAR feels the Romanian economy still sees unfair competition in a number of sectors, such as constructions, wood industry and agriculture. ZF
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