Minister of Finance Andrian Gavrilita states that the tax reform providing for the standardization of the VAT rate and the elimination of certain tax facilities will not significantly affect the majority of the population, and any additional costs will be offset through new support measures.
The minister said that the estimates circulated in the public space regarding an additional burden of tens of thousands of lei per year for families did not correspond to the calculations carried out by the ministry.
“For the absolute majority of the population, or for about 80% of citizens, the effect that could occur should not exceed 200 lei per month. Precisely for this reason we propose support measures that will be more than 200 lei per month, so that most citizens do not lose out as a result of this reform,” said Gavrilita.
According to the minister, the reform aims not only to simplify the tax system, but also to increase fairness in the distribution of state support. He noted that the current VAT facilities disproportionately benefited households with higher consumption.
“When you eliminate VAT or apply reduced rates, the benefit is greater for those who consume more. On a bill of 1,000 lei you save much less than on a bill of 10,000 lei. From a public policy perspective, we must ask ourselves whether it is fair that the largest benefit goes to those who also have the highest levels of consumption,” the minister explained.
Andrian Gavrilita stressed that the Government intended to redirect the resources obtained from eliminating tax facilities towards better targeted measures, especially for families with children and vulnerable people.
“The personal allowance will be transformed into an in-work benefit and will increase by at least 200 lei. Also, for children we propose payments of at least 200 lei, significantly higher than the current support. The goal is to stimulate work and increase citizens’ disposable income,” the minister said.
Referring to the application of the single 20% VAT rate for natural gas, electricity and heat energy, Gavrilita stated that the authorities were analyzing mechanisms through which the impact on bills would be compensated.
“The simplest thing the state can do is to introduce a direct compensation in the bill, using all VAT revenues to cover this difference. In this way, most citizens would not suffer,” the minister declared.
The head of the Finance Ministry reiterated that the reform was part of the “Moldova invests, Moldova works” program and aimed to stimulate legal employment and investment.
“We do not want people to depend on compensations. We want to create conditions in which citizens can earn enough through work and do not have to hold out their hand to the state. Our role is to encourage work and economic development,” concluded Andrian Gavrilita.
The Ministry of Finance has launched public consultations on the tax reform, which provides for the standardization of VAT rates and the gradual elimination of some existing facilities, measures that the authorities consider necessary for simplifying the tax system and increasing the effectiveness of social policies. (Moldpres)