Vyacheslav Kunev
“I’ve heard representatives of the Ministry of Finance say time and again that ‘we have a complex tax system,’ with many different tax breaks and exemptions, and that we need to simplify and standardize everything—and then we’ll all be happy. In fact, the proposed VAT option in the new fiscal policy is a vivid confirmation of this—‘20% for everyone!!’. Well, this cannot but be a cause for serious regret,” Cunev believes.
He addressed officials with the following statement:
“Dear representatives of the Ministry of Finance—a simple tax system works only in a primitive economy! As a country’s economic model becomes more complex, the corresponding fiscal model must inevitably become more complex as well to account for the specific characteristics of its individual sectors. Ideally, for each sector, industry, or type of activity, there should be an economic and fiscal policy that stimulates the maximum potential of that sector, industry, or type of activity at this specific historical moment, based on the goals the state has set for its development,”.
Applying limited and simple taxation to an already complex economy has two destructive effects on it.
First, it means reducing the attractiveness of certain sectors to foreign investment (recall the IT boom in Moldova following the introduction of a special tax regime for the industry, which served as an unprecedented competitive advantage).
Second, it triggers the decline of those economic sectors that are still in the growth and/or capitalization phase amid weak demand.
“As far as I’m concerned, there are only two things that need to be simplified in government: the permitting process and the reporting/oversight process. But if you try to reduce complexity to simplicity simply because it’s convenient for you, you’ll turn something complex into something primitive with low added value. Is that really what Moldova needs?” the entrepreneur asked.
