Expert says billions of lei annually leave Moldova's state budget over lack of clear monitoring of fiscal facilities

Chisinau, 29 July /MOLDPRES/ - There is no authority monitoring the enforcement of fiscal facilities in Moldova at present. Therefore, while in 2011, the fiscal facilities represented a half of the state budget revenues, presently, the share of facilities stands at 60 per cent, an economic analyst of the Viitorul Institute, Veaceslav Ionita, made statements to this effect at a programme titled, Fifteen minutes of economic realism.     

According to the expert, the fiscal facilities must not be excluded, but revised, in order to clearly determine where the state budget money goes. An analysis to this effect appears in a report of the Court of Accounts (CCRM), which in 2016 established the existence of 105 fiscal and customs facilities, of which 50 have been applied during more than 20 years.   

The economist also referred to several concrete examples. For instance, people who construct houses in the countryside, pay 20-per cent value added tax (VAT) for the purchasing of building materials; people living in cities and towns, who pay flats, do not do this. None of those who bought apartments worth 40,000 euros know that the state provided them a fiscal facility worth 8,000 euros. The second facility is an eight-per cent one on sugar. “Is it an essential product? On the contrary, physicians say that we have a problem: we consume twice as much sugar above the norm,” Ionita said. The state annually spends 100-120 million lei for the concerned facility.

In 2011, the fiscal facilities “represented about a half of the state budget revenues and in 2015 – 62 per cent of the budget. In ten years, during which the state have been providing fiscal facilities, the losses amounted to 145 billion lei,” Ionita noted.    

”We do not demand the cancellation of the fiscal facilities. We demand that, when the budget is voted, there is an annex where the list is showed. In 2019, the fiscal facilities will stand at 23 billion lei, with a share of 60 per cent of the state budget revenues. In the last ten years, the revenues to the National Public Budget amounted to 275 billion lei and the expenses – 296 billion. A 21-billion-lei hole appears, covered by grants, sale of state assets and the fiscal facilities were seven-fold bigger that the money needed for covering the budget deficit,” Ionita specified.     

According to the economist, the fiscal facilities are equal to the sum of the social insurances budget. Next year, a state budget of 50 billion lei will be voted and the Finance Ministry must come up and say that the expenses are of 75 billion lei, of which 50 billion lei is at sight and nobody knows who gets 25 billion lei.   

”When they know the full list of fiscal facilities, they will switch to the second step; for example, not VAT cuts will be made, but subsidies will be provided to farmers. Each year, the authorities should decide whether we need those over 100 facilities or not. The second element: the governmental obligations must be included in the law in an article where each obligation of the government is described, which can become financial obligation at any moment. For instance, which are the risks of the First Home programme, so that it turns in state debt in the long run. At the same time, the government can also bear some legal consequences. The cancellation of a law can lead to litigation in future and can have certain legal consequences. When the lawmakers vote a law which can have legal consequences, he/she will think, as the MP will have to come up with amendments saying that we will lose 20-30 million lei once the law passed,” economist Veaceslav Ionita added.