PM Adrian Nastase wants to see the Fiscal Code draft debated during the Government session on Thursday, the version that stipulates replacing the five income category taxation system with a single tax quota inclusive, governmental sources say.
Finance Minister Mihai Tanasescu had a meeting with MPs scheduled for Monday night during which he was to present the project to introduce the single tax quota as of 2004.
Ministry experts have put together three budgetary simulations of the outcome introducing a single tax quota of 16%, 18% and 19.6% might have. The most recently suggested quota, the 19.6% is also the option whose introduction would not result in any budgetary revenue decline.
Introducing the single quota practically means dropping the global income tax system, which the Finance Ministry has been struggling to implement since 2000.
The whole deduction system included in the initial Fiscal Code draft, i.e. those deductions for spending on insurance, including home insurance, on interests on housing loans etc., will disappear in case the single tax quota is chosen. At the same time, budgetary aids such as those for paying heating expenses will be dropped.
In case the 19.6% quota is preferred and probably upped to 20%, the Finance Ministry is considering a number of deductions for those taxpayers whose incomes are within the minimal ceiling on which an 18% tax is currently levied. This will, however, require a lot of investigations from social workers to make sure the taxpayers saying their incomes are within the minimal ceiling in their tax returns have no other streams of income they did not mention.
The issue was taken up with EU representatives during an economic forum in Krynica, Poland last week attended by President Ion Iliescu. Theoretically, EU has no objections to make to this fiscal reform measure, which the Polish authorities are contemplating, too, on condition that the budgetary revenue targets should be attained.
The talks over the single tax quota have also drawn IMF's attention, whose representatives requested more information from the Finance Ministry. As a general rule, the Fund does not like such measures.
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