Diminution of employers’ contribution to social budget will help contract shadow economy, opinion

The diminution of the employers’ contribution to the social insurance budget will contribute to reducing the underground economy in Moldova, Roman Chirca, director of the Market Economy Institute, stated in the talk show “Fabrika” on Publika TV channel. According to the economist, the changes proposed by the Democratic Party on the fiscal segment will solve a number of problems existing in the system, IPN reports.

According to Roman Chirca, even if it is an electoral year, the proposed measures will have a long-term effect and create positive preconditions. “I think the most relevant is the diminution of the contribution paid by employers from salaries from 23% to 18% as not the campaigns “Don’t pay salaries unofficially!” can lead to the eradication of the illegal payments, but a fiscal measure,” he stated, adding this is a significant move and the small and medium-sized enterprises will be able to officially employ staff.

Democratic MP Sergiu Sirbu said the initiative will start to produce effects in at most three months. First of all, the effects will be felt by the ordinary citizens as they will collect higher salaries because the income tax rate will be reduced and the personal exemption will be doubled. “This package of laws didn’t appear in a day or two. We during many years have discussed and looked for fiscal policy solutions so as to have appropriate budget revenues, on the one hand, and to have a not very large tax burden, on the other hand , and to also diminish the shadow economy as statistics show we are a poor country and the average and minimum wages here are low. We close the list of the European countries, but we still have about two underground budgets,” he stated.

In a press briefing after the Democratic Party’s weekly, Prime Minister Pavel Filip, the first deputy chairman of the PDM, said the income tax for private individuals will be reduced from 18% to 12%. The employer’s contribution to the state social insurance budget will be decreased from 23% to 18%, while the personal exemption form income tax will be raised to 24,000 lei.