ECO-BUS WEEKLY DIGEST October 5-11. Most important Economy & Business news by IPN
● MONDAY, October 5
Moldova to gather smallest harvest of grapes in last ten years
The grape harvest this year will be the smallest one in the last ten years, being estimated at 150,000-200,000 tonnes. The data provided by winemakers show the supplies of wineries remained at the level of last year – about 18 million decaliters. This quantity is enough to satisfy the demand on local and international markets. The National Office of Vine and Wine says the grape harvest was affected by the weather conditions of the last two-three years. In the winemaking industry, despite the pandemic, the level of exports is satisfactory even if the global wine market faces a decline of about 15-30%. During the first seven months of this year, wine exports decreased in volume by about 5.5 million liters (6.5%) and in value by approximately 87 million lei (6.8%). The bottled wine market grew by 5% in volume and by 0.2% in value. The non-bottled wine market has been more seriously affected, declining by 11% in volume and by 16% in value.
“Gările Auto Moderne” manager denounces tax evasion schemes
The obscure practices used by some of the passenger carriers and the habits based on tax evasion schemes are for them more profitable than operation in legal conditions, said the manager of “Gările Auto Moderne” SRL Yuri Moroz. According to him, there are a lot of schemes that are applied by some of the operators. One of the most frequently used schemes is the embarking of only several passengers in the bus terminal and taking of the other passengers outside the bus terminal so as to transport these without tickets and not to pay taxes into the state budget. In a news conference, Yuri Moroz said the contract relations with transport operators are based on the principles set down by the state-run company “Gările și Stațiile Auto” before the signing of the public-private partnership contract. The only difference is that clear conditions concerning the observance of the legal framework were imposed under the partnership. These conditions are also part of the contract obligations of transport operators. According to the manager, the illegal schemes and practices of tax evasion are in the intestates of carriers whose drivers work on regular routes with own units of transport.
Farmers put off protests, but continue to ask for 3,000 lei/ha
The situation of grain crops of the second group that were affected by drought is much more serious than of grain crops of the first group. In such conditions, the farmers who postponed the planned protest ask for subsidies of at least 3,000 lei per ha from the state in support. A group of farmers developed the issue in a news conference. Farmer Ion Plămădeală said that farmers’ protests were to be resumed on October 5. But they decided to put off the protest as it rained and they need to do field works until the soil is wet. Meanwhile, they had discussions with the minister of agriculture. The farmer said that he and his colleagues feel bad when the authorities say they do not have money for this sector and they cannot take the money from pensioners, teachers, doctors, etc. But a social section should not be contraposed with another one. “The farmers are the roots of a tree that yields fruit. They are the basis of the economy of this state. If we do not take care of the agricultural sector, we will not have a processing industry, trade and many other things.
Minibus drivers are forced to present themselves at October 7 protest, statement
The minibus drivers are obliged to go to the protest that is set to take place in the Great National Assembly Square of Chisinau on October 7. As they are employed, the drivers cannot ignore the superiors’ demand as they can lose their job. A part of them don’t even know what the goal of the protest is, the manager of “Gările Auto Moderne” SRL Iurie Moroz stated, noting the protest organizer – chairman of the Employers Association of Road Transport Operators Oleg Alexa – pursues own goals and the chaos suits him. In a news conference, Iurie Moroz said that manipulating the carriers, Oleg Alexa exerts pressure on the state institution and constantly threatens with protests. This way he gets own benefits. If he cannot achieve his pecuniary goals, he announces protests. “For example, the so-called protest announced for October 7 centers on the fact that, according to him, the company “Gările Auto Moderne” dispossessed the state and came into possession of national bus stations. This is a lie and manipulation,” stated the manager.
Some of income tax rates could be raised
The draft fiscal and customs policy document for 2021 proposes raising some of the income tax rates to a standard rate of 12%. The bill was proposed for public debates by the Ministry of Finance. The bill says the tax rate for leasing out by a private individual could rise from 7% to 12%, while for leasing property out by private individuals to legal entities, except for farmland, will be taxed with 12%, up from 10% at present. The tax rate in the case of goods sale will be increased from 10% to 12%.
Road taxes could be included in excise duties on oil products
The draft fiscal and customs policy document for 2021 suggests including road taxes in the excise duties on oil products. The bill was proposed for public debates by the Ministry of Finance. The authorities specify the disadvantage of the current system resides in the absence of a close correlation between the level of utilization of the road infrastructure and the size of the road tax. It is suggested amending the current mechanism for paying the road tax by motor vehicles registered in the Republic of Moldova by excluding the tax for using roads by motor vehicles registered in the Republic of Moldova simultaneously with the rise in excise duties on oil products.
● TUESDAY, October 6
Subsidies for companies that collect and recycle packing
The packing collecting and processing companies could benefit from subsidies, while the business entities that ensure the collection of packing could benefit from a reduction in the environmental tax, as the draft 2021 customs and fiscal policy bill proposed by the Ministry of Finance for public debates provides. The bill author says the business community is unwilling to pay environmental tax for particular recyclable products and, simultaneously, to create collective systems for collecting recyclable waste or to ensure individually the collection of recyclable waste as they have to incur particular participation-related costs or costs associated with the buying of waste collection and processing equipment.
Authorities intend to remove restrictions on import of old cars
The authorities propose lifting the bans on the import of units of transport as of next year. Simultaneously with such a move, the excise duties could be essentially increased, proportionally to the life of the vehicle. The proposals are stipulated in the 2021 draft fiscal and customs policy bill that was proposed for public consultations by the Ministry of Finance. Currently, the customs legislation imposes a series of bans on the import of units of transport. For example, it is banned importing motor vehicles larger than ten years. In the case of buses with up to 20 seats, the import of vehicles older than seven years is banned. Tractors older than 12 years can also not be imported.
Ministry of Finance suggests annulling 15% reduction in property tax
The Ministry of Finance proposes annulling the right to a 15% reduction in the property tax enjoyed by taxpayers that fully pay the tax for the given year by June 30. Under the 2021 draft fiscal and customs policy bill that was proposed for public consultations by the Ministry of Finance, the move will strengthen the financial autonomy of the local public authorities. “It should be noted that a World Bank study of September 25, 2017 recommends annulling the given exemption, this being considered an exemption based on subjective criteria related to a particular group of taxpayers,” says the bill.
It is proposed annulling exemptions provided to husband/wife
Staring with next year, the personal exemption provided to private individuals and the additional exemption could be increased by 5% – from 24,000 lei to 25,200 lei and, respectively, from 18,000 lei to 18,900 lei. The proposal is stipulated in the 2021 draft fiscal and customs policy bill that was proposed for public consultations by the Ministry of Finance. It is also proposed increasing the exemption for maintained persons by 50% – from 3,000 lei to 4,500 lei. The measures are aimed at attenuating the impact of inflation on people’s incomes and at supporting the families with children.
● WEDNESDAY, October 7
Excise duties on tobacco, alcoholic and oil products to be set for three years
As of next year, the size of excise duties on tobacco, alcoholic and oil products could be set for a period of three years. According to the Ministry of Finance, this will enable to maximize the budget revenues and to gradually reduce consumption of tobacco and alcoholic products. Also, after the rise, the excise duties on the given products will be close to those used in the neighboring counties. The risks associated with smuggling will be this way diminished. The adjustment of excise duties is also a commitment stipulated in the Moldova – EU Association Agreement. For example, the excise duty on filter cigarettes in 2021 will be 621 lei+13% for 1,000 pieces, but not more than 834 lei. In 2020, the excise duty was 540 lei+13, but not less than 700 lei. For 2023, the rate was proposed at 822 lei +13%, but not less than 1,103 lei.
Worst recession since global financial crisis of 2008 is expected, WB
Emerging and developing economies in the Europe and Central Asia region are on course to contract by 4.4 percent this year, the worst recession since the global financial crisis of 2008, says the latest edition of the World Bank’s Economic Update for Europe and Central Asia, released today. Growth is expected to recover in 2021, between a range of 1.1 percent to 3.3 percent. The outlook remains highly uncertain, however, and risks are tilted to the downside. The pace of recovery depends on the duration of the coronavirus (COVID-19) pandemic, the availability and distribution of a vaccine, and the degree of improvement in global trade and investment. As a result, growth in the region could be weaker than expected if the pandemic worsens.
€300m loan for rehabilitating three national roads
The European Bank for Reconstruction and Development and the European Investment Bank will offer Moldova a loan of €300 million for rehabilitating the national roads M2, M3 and M5. Minister of Economy and Infrastructure Sergiu Railean made a request for financing to the two financial institutions and recently received confirmation of the approval of payments. The Ministry of Economy said the financing corresponds to the investment objectives of the European financial institutions for the Eastern Partnership that were agreed with the European Commission in 2019. Besides the financing of capital investments, the framework agreement will also be a catalyst for using the technical assistance resources for preparing a derivative investment line in in road infrastructure.
Law firm for dispute with “Komaksavia Airoport Invest Ltd” chosen
The Cabinet approved the draft decision concerning the selection of the law firm that will represent the state in the lawsuit filed by “Komaksavia Airport Invest Ltd” against the Republic of Moldova, which is pending at the Arbitration Institute of the Stockholm Chamber of Commerce. This is the law firm “Buruiana & Partners”. Under the decision, the director general of the Public Propriety Agency is empowered to sign the legal assistance contract with the law firm and the documents, agreements and reports needed for the proper execution of the given contract. The Public Propriety Agency will be allocated the equivalent in lei of 169 940 euros, from the Government’s reserve fund, for paying honorariums to the law firm.
● THURSDAY, October 8
Officials reserve assets at US$3.453,39bn
The official reserve assets at end-September were US$3.453,39 billion, an increase of US$62.37 million compared with end-August, when they totaled US$3.391.02 billion. According to the National Bank of Moldova, the rise in the official reserve assets stemmed from the net inflows related to the mandatory reserve assets of licensed banks in the amount of US$51.49 million and from the interventions on the domestic currency market in the form of purchases of currency, in the amount of US$29.6 million.
Ministry of Finance suggests capping local taxes, CALM says this is not a solution
The local taxes could be capped as of next year. Such a proposal was formulated by the Ministry of Finance, which argued that the exclusion of capping generates uncertainty for the business community and creates a selective approach to setting the applicable local taxes and their rates. On the other hand, the Congress of Local Authorities of Moldova (CALM) said the capping of taxes is not an appropriate solution. On the contrary, this initiative will lead to conflicts. The 2021draft customs and fiscal policy document proposed for public debates says that in the context of a priority strategy – decentralization – the exclusion of capping of local taxes revealed a number of shortcomings of the local public authorities in the fulfillment of related duties, such as the selective approach of the responsible authorities of different localities to setting the applicable local taxes and their rates.
● FRIDAY, October 9
Secretary of state: Restrictions on import of vehicles could be lifted
“The motor vehicles older than 10 cannot be imported today. We have situations when national business entities that provide transport services on interurban routes are unable to purchase buses younger than ten, which are very expensive and it is very hard to recoup these investments. It is an extreme situation when buses older than 20 run on interurban routes. It’s impossible to replace the old buses with newer ones,” secretary of state at the Ministry of Finance Dorel Noroc stated, noting this is an argument in favor of the authorities’ intention to remove the restrictions on the import of units of transport. According to the official, the current administration considers there should be no restrictions on the import of goods as these limitations lead to smuggling.