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mihai chirica iasi mayor

Iasi mayor to sue the Gov’t over tax reform

Iasi Mayor, Mihai Chirica, known for his dissidence against the ruling party, has announced on Tuesday that the city hall would sue the Government over the Tax Code, arguing the institution’s public local autonomy is “flagrantly broken”. Chirica accused the Executive that it defies “both the local autonomy and the budget legislation”.

A decision has been taken without observing the law content. The public local authorities have no mechanism to veto a law, but they can resort to other institutions. So, we will first resort to the Ombudsman, but we’ll also ask other three institutions, the High Court of Cassation and Justice, the Justice Ministry and Romania’s Attorney General to intercede with the Constitutional Court to counter this GEO that is not complying with the legal framework. We’ll ask that the fiscal reform should be declared unconstitutional,” the mayor argued.

In his view, the ordinance is breaking the European Local Autonomy Charter, which says that public local authorities must be consulted over the allotted resources. “Nobody asked us how we’ll be able to pay the debts to the banks, how we’ll manage to cover the investment programs that are already started, how we’ll compensate for the financial losses (…),“ Chirica added.

The Iasi mayor said that the municipality’s budget would lose incomes of RON 95.5 million and that his city hall would not be the only one to sue the Government.

We’ll not be the only city hall to sue the Government. Think what blow will be for Miroslava commune, which is losing EUR 1.5 million, which were meant for rehabilitating the road infrastructure,” Chirica concluded.

Few days ago, the Bucharest City Hall also complained that its budget will fall in 2018 down by RON 1.36 billion, i.e. between 34.47% and 38.54% of the broken share of income tax to the municipality,  as a consequence of the amendments to the Tax Code. The decrease will be dramatic, if the executive does not approve compensations, the Capital city hall argued. For example, the subsidies for RADET and RATB amount to RON 1.1 billion per year.

The Government approved an emergency ordinance to amend the tax code last Wednesday.

The emergency ordinance includes the transfer of social security and health security contributions from employer to employee and the cut of income tax from 16% to 10%. These provisions, as well as others, have been under heavy criticism from the employers’ associations, trade unions, from President Klaus Iohannis – who said the ‘great tax revolution will turn into a great tax turmoil’ which will lead Romania ‘into an economic and tax adventure with a sad ending.’

About Alina Grigoras Butu

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