On the eve of the elections, Marcel Čolaku took out of the drawer a proposal on excessive taxation of the budget sphere, combining it with special pensions. Nicolae Chuke also says he is waiting for an analysis from Finance, but the idea is to target those who earn more than the president.

When can this proposal be implemented if the PSD, PNL and UDMR agree and the parliament passes a law on this matter that will not go to the Constitutional Court?

Not earlier than 2025, claim political sources from PSD and PNL. Until then, this is at most a campaign theme.

Constitutional dilemma

In the context of discussions about reducing budget expenditures, PSD leader Marcel Čolaku proposed taxing a combination of salary and a special pension for state employees. According to HotNews.ro sources, the PSD leader was referring to special budget officers who have special pensions and who also head public institutions such as ANRE, the Audit Chamber, ANAF, the Constitutional Court, etc.

Procedurally, such a proposal must be implemented through a bill to be adopted by the parliament.

There are at least two applicability issues here. First, the Liberals have repeatedly stated that they do not support progressive taxation and want to keep the flat rate.

Five days ago, Prime Minister Nikolay Chuke said that there is no discussion on the introduction of a progressive tax, but there is a working group under the Ministry of Finance that analyzes fiscal optimization measures. “PNL continues to support the single quota. We do not support the introduction of new taxes and fees, and what will be decided will be based on the analysis and discussion of the situation in our country,” said the Prime Minister.

Second, if the law provided that progressive taxation applies only to a certain category of employees (in this case, state employees), it would be challenged in the Constitutional Court and would not pass the constitutionality test. More precisely, the legal framework does not allow the discretionary application of the tax only for certain categories of taxpayers.

Thirdly, if the draft law introduced progressive taxation of accumulated salary-special pension for all categories of taxpayers from the budget or from the private system, as suggested by Marcel Cholaku at the Coalition meeting, problems would still arise.

According to the decision of the Constitutional Court in December 2020, taxation of special pensions can be carried out under certain conditions, according to an exact formula that does not contradict the decision of constitutionalist judges.

We remind you that in 2020, the Central Committee rejected the draft law adopted by the parliament, which provided for taxation of special pensions by 10% for those who receive a pension from 2001 up to 7,000 lei, and by 85% for those with more than 7,001 lei. .

The tax provided for by the contested law would have applied only to the amount that exceeded the upper limit of 2,000 lei and 7,000 lei, and only to that part which was not a contributory pension.

• The former head of CCR, Augustin Zegrean, on the re-taxation of state employees who earn more than the president: “This was done by the communists when they came to power”

Electoral dilemma

Another problem, this time a political one, is related to the PSD and PNL image strategy for the next period, a year before the general elections. “It is very difficult and unpredictable to change the Fiscal Code a year before the general elections. You can’t think about the budget and the private environment at the same time,” HotNews.ro sources explained.

By the way, PSD leader Marcel Čolaku publicly explained that the proposal made by the coalition on additional, progressive taxation will be aimed only at the budgets, with no discussion for the private sector at this time. Cholaku directed the public discourse to his own electorate, without clarifying that progressive taxation cannot be applied only to a certain category of taxpayers.

“We are talking only about accumulated wages and special pensions and only about the budgetary sphere. At that moment, if because of this amount you exceed the gross salary of the president, which is approximately 25,000 lei, it is normal to come, if it is constitutional, with an additional tax, because there are two revenues from the state budget. The law cannot allow only those who also have a special component of the pension to be passed over, nor can only some be prohibited. I believe that the correct approach is the border zone of taxation,” said Cholaku.

For his part, Prime Minister Nicolae Chuke confirmed that Čolak’s proposal concerns only the owners of budget funds, and not the private sector. “We are talking about taxation of individual incomes. The basic idea was to tax those with a higher salary than the president. We are waiting for the measure to appear, we are waiting for the analysis of the Ministry of Finance.”

Progressive taxation is a favorite theme of the PSD campaign

A year ago, the PSD introduced a series of measures to overtax the income from the state system, which exceeds the salary of the President of Romania.

What the PSD proposals for progressive taxation look like

• Re-taxation of 40% of salary income from the budget system that exceeds the salary of the President of Romania;
• A two-step increase in the taxation of special pensions, namely a tax rate of 40% for the amount exceeding the threshold of 9,000 lei (five average net pensions) and 90% for what exceeds 18,000 lei (10 average net pensions);
• Application of a progressive system of deductions from wages up to 4,500 lei, so that 0% tax is achieved at the level of the minimum wage;
• The contribution in the field of health care and education is 0.5% of the turnover, which is paid by companies with an annual income of more than 100 million euros. The measure will be temporary and will be in effect for a limited period of two years.

How many public servants have a higher salary than the president

Official statistics, valid as of the middle of last year, show that 30,574 Romanians have a basic salary higher than that of the head of state. According to the information published by the Presidential Administration, the President of Romania had a corresponding position gross additional payment in the amount of 24,960 lei.

• Cholaku and Chuke want to take money from state employees who earn more than Yohannis. How many Romanians have a higher salary than the president