The most powerful business people association in Romania - AOAR challenges the authorities' plan to strike off the debts to the State of a number of state-run companies, feeling this is in breach of the free competition principles on the market and might make the European Union not grant the functional market economy status to Romania.
"The only thing the Government achieves through this remission draft is to artificially maintain jobs and create moral hazard. The managers of the state-run companies are encouraged to no longer fight for their respective companies to become efficient because they know their debts will be cancelled at some point. This draft only serves to confirm inefficiency and inept management," Florin Pogonaru, chairman of the Romanian Business People Association (AOAR) told Ziarul Financiar.
He added that in order to create real jobs, the authorities should be more supportive of private companies. "Instead of squandering the budget money, the authorities should support the private sector, which contributes 60% to the formation of Romania's Gross Domestic Product - by repaying the value added tax (VAT) in due time and by dropping the tax on reinvested profit, in order to create real jobs," Pogonaru said.
The AOAR representative says this remission would be much more effective if used in case of there are privatisation offers for a company and the market verifies the company in question is viable.
The business people representative feels the remission could influence European Union's officials who are to decide whether to grant or not to grant the functional market economy status to Romania this November.
"You cannot possibly want to get the functional market economy status in November, when you come up with such an ordinance, which only consolidates the role of the State in the economy. Enacting the fiscal remission is like having the Government say <<I do not think we will get the functional market economy status>>, " Pogonaru said.
Without much ado about it, the Government has already decided to strike off the debts registered by a number of companies subordinated to the Economy Ministry and to the Transports Ministry to the state budget, to the social security budget, to the health insurance budget, to the unemployment budget and to the local budgets by August 31, 2003. This stipulation was introduced in the budget adjustment ordinance enacted during the Government session last week.
The Finance minister had said the fiscal remission would be part of the budget adjustment ordinance the day before the enactment.
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