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Moldovan Lawmakers ‘Legalize Theft’

A new Moldovan law meant to ease the tax burden on the poor and stem the shadow economy is meeting sharp criticism both at home and abroad. 3 August 2018

Moldova’s parliament last week passed a law that cuts taxes and offers amnesty to those who register their assets.

 

Moldovans who earn a monthly income less than the equivalent of $95 (82 euros) will not be required to pay income tax. An amnesty will also be introduced with the aim of allowing investors to register assets without providing documentation of how they were acquired, requiring them only to pay a 3 percent tax. The measures are scheduled to come into effect in October.

 

Parliamentary Speaker Andrian Candu said the law aims to help poor and middle-income citizens, and that it is not designed to benefit the wealthy. The ruling party also argues the asset amnesty will shrink the shadow economy, Reuters says.

 

However, the International Monetary Fund – a significant lender to the country – criticized the law.

 

"In IMF staff's preliminary view, the recently approved package of tax initiatives and capital amnesty are not in line with the objectives of the Fund-supported program," Reuters quotes Volodymyr Tulin, the IMF resident representative in Moldova, as saying. “Specifically, the adopted measures will increase the regressivity of the tax system, could undermine tax compliance, and pose significant fiscal risks."

 

For its part, the U.S. Embassy in Chisinau said the law “legalizes theft and corruption, and also damages the business environment in Moldova.” And the head of the EU mission in Moldova, Peter Mihalka, heaped on additional reproach:

 

"The legislation is incompatible with current reforms aimed at strengthening the rule of law; the fight against corruption, money laundering, and organized crime; and improving the business climate," he said, RFE/RLreports.


One of the law’s fiercest critics, opposition leader Andrei Nastase, said, "The fiscal amnesty law recently approved by the parliament in reality amounts to the legalization of fraudulently acquired money.”

 

Moldova has dealt with major losses brought on by money laundering schemes enabled by a corrupt judicial system, critics say.

 

In addition to the tax law, Moldova recently passed a golden visa program that permits foreigners to acquire Moldovan citizenship by investing as little as 100,000 to 250,000 euros in the country, Balkan Insight notes.

 

 

  • Moldova is one of Europe’s poorest countries, with an average monthly salary of just $345 in 2017, according to the national statistics bureau.

 

  • The Western-leaning Nastase appeared to have won the June mayoral runoff in Chisinau until the vote was revoked by Moldova’s courts. Nastase accused powerful oligarch Vladimir Plahotniuc of influencing the court decision.

 

  • The EU froze its 100-million-euro aid package to voice its disapproval of the Nastase ruling.

 

 

Compiled by Tyler Haughn

 

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