The claim of trade unions to increase the personal exemption to the minimum subsistence level – achieved

Over several years, the National Trade Union Confederation of Moldova, in drafting and adopting the Medium-Term Budgetary Framework as well as fiscal-fiscal policy, submitted to the Government the requirement to increase the personal exemption to the taxation of individuals’ incomes to the minimum of existence.

Since 2013, this requirement has been included in the Medium-Term Budgetary Framework, setting in 2015 the exemption to the minimum subsistence level. Later, however, this provision was excluded.

We welcome the decision recently made by the Government to implement this call from the trade unions, which aims to reduce the tax burden on the low incomes of employees, including the tax exemption of the subsistence minimum, which is also an international practice.

Ensuring equality of personal exemption with the minimum of existence was also a condition of trade unions in case the requirement of the business environment to promote a unique tax rate on the incomes of individuals was promoted. Establishing a single tax rate of 12% is an incentive for entrepreneurs to administer this tax. The implementation of this measure can motivate both employers and workers to formalize salaries paid in envelopes. The tax rate set in common with the personal exemption equal to the minimum subsistence does not affect the employees’ income, ensuring in all cases an increase in their income. Trade unions, however, advocate a proportional income tax, depending on their size, ensuring the social responsibility of those with high incomes.

Trade unions support the reduction in the share of social security contributions paid by the employer, from 23% to 18%, which will also reduce the burden of taxation on the salary fund. We believe that this change will have a significant impact on the wage bill and the increase of wages.

The measures related to the taxation of economic agents in HORECA (hotels, restaurants, cafes), as well as those providing taxi passenger transport services – areas where there is a high share of informal work and wage phenomenon “in the envelope”, are welcome. These measures will help to reduce the phenomena in question.

We believe that the promotion of these reforms, aimed at reducing the tax burden on economic agents and employees, must be accompanied by a tightening of the sanctions imposed on the use of “informal” work and the payment of wages in the envelope.

A beneficial impact, we believe, will also be the reduction of the VAT rate, up to 10%, for accommodation and food services delivered in the framework of accommodation and catering. This will stimulate the reduction in prices for these services and products, with a positive impact on the population.

Department of mass media and international relations