Fiscal policy will see no spectacular modifications in the next several years
No significant changes to the fiscal policy are planned for the next three years, Info-Prim reports, making reference to the Medium-Term Expenditure Framework (MTEF) for 2009- 2011, which is a strategic planning document under formulation. Minister of Finance Mihai Pop says that the fiscal policy will witness a certain continuity, important especially for the legal entities and individuals that carry out entrepreneurial activities. On the other hand, the predictability of the fiscal policy is essential for attracting foreign direct investment. Reviewing the debates on the MTEF held until present, Pop said that the two income taxes of 7% and 18% put on individuals in 2008 would be maintained during the next three years. At the same time, the personal exemptions will rise every year by 900 lei, while the exemption for maintained persons will grow by 120 lei a year. The personal exemption in 2008 is 6,300 lei, while the exemption for maintained persons is 1,560 lei. The undistributed profit of the companies will not be taxed, as in 2008, while the profit that will be used to pay dividends will be taxed 15%. The excise duties will be adjusted during 2009 – 2011 too, in line with the rate of inflation. The second stage of taxing the real estate at the market value will begin on January 1, 2009 and will include the commercial facilities and garages. The plots of land and the constructions located on them will be taxed from January 1, 2010, while the rural houses from January 1, 2011. As regards the social taxes, the present contribution of 29% paid into the state social insurance budget will be reduced by 1% on January 1, 2010 by redistributing it between the employer and employee according to the ratio 23:5. The mandatory health insurance contribution that makes up 5% in 2008 will be raised yearly by 1% up to 7% by equally redistributing it between the employer and employee. These are proposals of the working group that coordinates the working out of the MTEF for 2009 – 2011 and are not yet definitive. A meeting of the given working group is scheduled for March 10. It will be attended by heads of ministries and other institutions as well as by representatives of the social dialogue partners – the trade unions and employers. The meeting will discuss the abovementioned proposals and the macroeconomic indicators that will lay at the basis of the MTEF, Pop said. He also said that at the meeting, the sector working groups will present reports on the programs for developing the given sectors during the next three years. The Ministry of Finance has plans to shift to program financing. For instance, the MTEF for 2008 - 2010 includes concrete programs for financing presented by such sectors as education, healthcare, social protection, agriculture, culture and national defense, as against three sectors in the MTEF for 2004 – 2006 (education, healthcare and social protection). Simultaneously, the draft MTEF covers ten territorial-administrative units that also aim to shift to concrete program financing. The formulation of a Medium-Term Expenditure Framework enables to more efficiently use the available financial resources, to identify new internal reserves and redirect them to financing priority programs. The stipulations of the MTEF are important guidelines when drafting the yearly state budget law and for the local budgets. The MTEF for 2009 - 2011 will be finalized by end-April.