The minister of labor, Lia Olguta Vasilescu, has announced that the government is looking at removing the flat tax rate of 16 percent in the case of households and replace it with a system in which individuals will be able to deduct certain expenses.
The underlining principle of the potential change of the taxation framework is to shrink the black economy, which accounts for close to 30 percent of GDP at this moment.
“It’s the American system. The idea is to remove from the black economy as much money as possible, and related to the question regarding the sources that will finance the hike of wages: we tax everything,” said Vasilescu.
The government is working on several scenarios involving a complex deduction system for expenses, according to sources quoted by HotNews.ro.
“It’s a fiscal deduction system for households and at this moment the Fiscal Code does not include this concept of household or family, compared to other countries. This is why there is an effort to redefine these concepts from a fiscal perspective,” according to the sources.
Vasilescu explained that for instance, the expenses for private tutoring of children could be deducted by the parents.
At the moment, the center-left ruling coalition comprising PSD-ALDE is focusing on the new draft bill for the wages of public sector workers. The bill was posted on the website of PSD and minister Vasilescu recently said that the new law could be approved this summer.
Meanwhile, the liberals said that they plan to block in Parliament any attempt of the ruling coalition to scrap the flat tax rate.
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