Mircea Coşea: "Fiscal measures will inhibit economic growth"

University professor and economist Mircea Coşea believes that the fiscal measures that the Government wants to implement will inhibit economic growth, will lead to the transition of several companies to the black economy, because the respective changes are directed against Romanian capital and domestic companies.

Mircea Coşea told us: "For now, the only positive thing is that the Government has finally decided to make these measures public so that we can discuss them and form an opinion on what will happen. First of all, there are measures that do not have any economic logic or true economic thinking and in relation to the environment and the period we live in. They are measures aimed at a kind of gathering, of accumulating money anyway and anywhere, without taking into account the consequences. All these measures can bring a profit to the state budget, but not more than 20% or maximum 30% of the deficit we have. In the short term, immediately, we will have this result. In the medium term, we will have a negative impact because the consequences of these measures on the economy as a whole have not been taken into account, not only on the business environment, but also on everyone's situation, including facilities, because the effects will reverberate all along the line. There are some effects that, instead of stimulating economic growth, inhibit it".

His Lordship mentioned that, secondly, the measures target the business environment with domestic, Romanian capital, because nothing that is said has anything to do with multinational companies and those with foreign capital.

Mircea Coşea specified: "The very bellicose statements made by the prime minister and other government ministers regarding the application of a solidarity tax no longer appear in this document. So it does not have the political and economic power to have an impact on foreign capital. All the elements in this document will have effects on the Romanian capital and on the Romanian business environment".

Then, Professor Coşea believes that the wholesale elimination of tax facilities for employees in the IT, agriculture, construction and agri-food sectors is a mistake, because the facilities granted are actually incentives.

Mr. Mircea Coşea says: "But the incentives are applied to those economic branches that, over a certain period, bring benefits to the whole economy because they have a higher growth potential, something already proven by construction, IT and agriculture, which had a consistent growth based on these fiscal facilities, growth that prevented our country from entering an economic crisis or a technical recession. We had minimal economic growth, but we did, thanks to construction, IT and agriculture. I believe that we must have a strategy in which the priorities we have are established and they are applied gradually and temporally to certain branches, not in bulk. If you remove the facilities en bloc, it's a purely accounting, arithmetical approach, which has nothing to do with a vision of the future of the economy".

His lordship also found that in the draft normative act there are some measures that cannot be applied, such as the taxation of properties that exceed the value of 500,000 euros and of automobiles that exceed the value of 75,000 euros.

Mr. Coşea specified: "They cannot be implemented, because we do not have the necessary information base. How do you determine that the value of a home or building is over 500,000 euros? That at the town hall and at the cadastre you don't have the necessary tools to determine the value of a property, but you have the tax value and that resulting from the town hall's deeds or from the sale-purchase or inheritance deed or the inventory value. The same is the case with the taxation of automobiles that have a catalog price, sale price, leasing price, rental price, etc. They are not measures that have predictability or if they do they will create so many problems that will lead to hundreds or thousands of lawsuits. People will try to prove that the provisions of the new law have been wrongly applied to them. It is a logical matter. The same with the taxation of banks, which is a complicated measure because the profit of banks is a very difficult concept to specify. It was said that there was a discussion between the Government and the NBR to define what profit means. We would also like to know what is the respective notion that would be accepted by the banks, because they do not have equity, but only working capital. They receive money and give money without having any equity. The negative effect of the measure of taxing banks on turnover is obvious, because this taxation will enter prices, which will again bring great pressure on those who have loans and we will talk about something almost comical because the biggest customer of banks is the state . That measure will thus have a boomerang role: the state taxes the banks and will pay higher interests".

That's why he considers the tax changes to be "accounting, arithmetical, calculating measures, as they used to be in agricultural production cooperatives; they are measures that measure where they can take, how much they can take as quickly as possible, without having any kind of thinking, perspective, any notion of analysis of the effects that these measures can have on the future".

In his lordship's opinion, these measures can lead to problems in the national economy, "because many elements of the black economy will appear because one thing that is difficult to understand is why in a modern, European economy, you tax success in business, instead of to stimulate it, to motivate business".

Mircea Coşea states: "It is clear that these measures will cause damage, instead of facilitating the running of businesses that mean jobs and the payment of taxes and fees. We will have a black economy, there will be things that will be hidden from the record, it will lead to the departure of Romanian capital from the country and the relocation of some Romanian companies to Bulgaria, Hungary or the Republic of Moldova. These are measures that, from my point of view, have many flaws in thinking and therefore have elements of populism".

Regarding the allocation of a sum of money instead of meal vouchers or holiday vouchers, Professor Coşea believes that the problem is not easy to solve, because experience has shown that the respective vouchers and vouchers represented the means of developing some economic branches.

Mircea Coşea told us: "What importance does it have that, after a certain amount, you stop giving people meal vouchers, when in fact by using them the citizen can help HoReCa or tourism or the economy? You cannot turn meal vouchers into money, as they can be used for other means. And the so-called increase in the value of meal vouchers is a nullity because tax is applied. The state defends itself by taxing these vouchers, instead of thinking about the importance of these vouchers in the development of certain branches or sectors of activity. Meal vouchers contribute to the development of farmers, production, HoReCa, everything that means service. Holiday vouchers develop tourism.

There are things that are difficult to understand outside of this conclusion that you cannot avoid: no one thinks about the consequences of the measures they take, but which will have important effects in the national economy".

In relation to the above, Mr. Coşea believes that we should be concerned about the visit made to Bucharest during this period by a delegation of the International Monetary Fund. In his lordship's opinion, this visit shows that the IMF is concerned about what is happening in our country, and Mircea Coşea states that, if the effects of the measures listed above will be visible at the beginning of next year, it will not be a surprise that the Government concludes of an agreement with the respective financial institution.