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Business as 'not-sot' usual

Obviously, the Education Minister, Mr. Liviu Pop has demonstrated that Romanian language may not be the strongest point of the current government. Unfortunately for the business community, math doesn't seem to be a strong point either. In no time at all, Mihai Tudose's Government succeeded in proving that numbers are a mystery to the Labour Minister, Miss Olguta Vasilescu, to the Business and Economy Minister, Mr. Mihai Fifor (it is too early to discuss Mr. Gheorghe Șimon's performance, less than a month into his mandate) or - even worse - to the Finance Minister, Mr. Ionut Misa.
Having said that, the real danger is that, as a whole, the government is failing political philosophy and basic economics curricula, too, as one can clearly detect an adversity towards the private sector in general and the evil, profit-driven multinationals in particular. Taken out of the context, the Prime Minister’s bashing of the banks for not paying a fair tax on profit, or his lashing out against multinationals for allegedly fiddling with the numbers in order to report losses year after year may seem an unfortunate, ostentatious, politically-motivated verbal accident. But no, the anti-business rhetoric is backed by active measures meant to increase state control over the economy and to give pre-eminence to the political rationale over the economic logic.  
First, there was the idea of introducing a turnover tax to replace the tried and trusted tax on profit. Ionut Misa’s blissful ignorance, when he first announced the proposal, was priceless, as the poor man didn’t even grasped the magnitude of the economic earthquake he was talking about. The measure was supposedly meant to cut deep into multinationals’ tax optimization strategies that would ultimately lead to more money into the state’s coffers. It’s not that companies have done something illegal, but in the mind of the state’s bureaucrats such ability seemed an unforgivable sin.  Somehow, the idea disappeared from the spotlight, but it is still lingering around.  Then we saw the split VAT payment idea, which has been widely criticized by the representatives of the business community, Romanian and international alike, for a long list of reasons. Appa­rently, the idea was generated by the most conservative left-wing policy-makers within the Finance Ministry, who do not care too much about the prospect faced by private companies, which are likely to see their cash flow strangled within three months of its introduction. Seemingly, the measure is meant to bring in more money, reduce VAT fraud and tax dodgers, but it is a bit ironic as it is widely acknowledged that tax evaders do not usually register for VAT, while VAT fraudsters always find a way around such legal nonsenses. In addition, we were presented with a plan aiming at transferring all social security payments from employers to employees, which is perhaps a good idea, making people understand just how much money they pay in order to be allowed to live in a dysfunctional state. When some wise-guy, big-mouth tax consultants demonstrated that after the introduction of such a measure em­ployees would end up cashing in a lower net income than before, Finance Ministry representatives quickly reacted by promising a new law to force employers – especially those in the private sector - to raise gross salaries accordingly in order to cover for the loss. Oh, there is a loss after all... A legal nightfall of the mind, as we, Romanians, say. 
Then we had the hike in tax on fuel, which has added, in the first stage, 0.35 lei to every liter of fuel Romanian freight companies use to keep the blood of the economy pumping. And there is another one coming… Again, Finance Minister Ionut Misa blissfully said that “he didn’t follow the matter”, so he wouldn’t be bothered with questions on the subject. This is the same Ionut Misa who was openly talking about the prospect of “nationalizing” the Pillar II of the national pension system six months ago. As Prime Minister Mihai Tudose has announced that the government should look into the performance of the Pillar II, the “prospect” is dangerously close to becoming yet another policy with dire consequences for the Romanian private sector. 
Then we had the assault of the local authorities, most notably in Bucharest, who have set up their own companies, from construction and landscaping to security and IT. It is hard to see how a private company can compete for public works with companies owned by the very authorities organizing the tenders, and how a fair competition can be ensured.  
Moreover, we have seen attempts to suspend good corporate governance practices in operation at an increasing number of state-controlled companies and allow party loyalty to become more important than professional expertise. Recently we had an array of abysmal political appointments in the executive boards of high profile state-owned companies at a time when the Finance Ministry summoned the companies to pay dividends four months before the end of the fiscal and calendar year.
So, is there a misfortunate planet alignment that has produced the most inept government businesswise? Or are we witnessing the implementation of a cunning plan to create the perfect economic storm that no one has witnessed in the last 75 years or so?

The interview is also available in our print edition of Business Arena.

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